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

Good morning, and welcome. My name is David Begleiter, of the U.S. Chemicals team at Deutsche Bank, and welcome to our 13th Annual Global Materials Conference. Leading up today is a team from DuPont, Ed Breen, Chairman and CEO; Lori Koch, CFO; and the IR team, Chris Mecray, a former Deutsche Banker and [indiscernible]. So with that, will run the fireside portion of this presentation. Ed, Lori, welcome, and thank you for coming to -- attending this year as always.

Great to be here.

So Ed, first, how is business maybe by end market, by region and by product?

Well, demand is very good still. Obviously, we're watching it. There's indicators out there, Europe's slowing a little bit, China with the lockdowns. We saw a little bit of slowness there last quarter and into this quarter. But overall, when you put the whole world together, demand is as good as it's been. So a little bit of softness during the year because of the auto production, semi chip shortage and all that, and a little bit on the consumer side in China. But that's pockets. When you put it all together, it's very good still.

As lockdowns have eased in China, have you seen demand pick up in that region?

I wouldn't say demand has picked up, but the supply chain is definitely getting better. So we have 2 facilities that were down, one that was Laird manufacturing site and one was our -- one of our water sites, and they're both up and running now about when we planned a couple of weeks ago. So that's good. Supply chain is getting better. We're getting the shipments out of China now. So that feels like it's -- over at least the next few weeks, that will be back to normal.

And overall for the consumer, any signs of weakness anywhere given the pressure from energy and food and other inputs?

A little bit in China, nowhere else.

That's impressive.

Yes. No, it feels good still.

And how is Europe given the war and all the other macro issues over there?

It's fine. I mean it's -- look, the GDP has been called down a little bit, but we're still seeing decent numbers there. We did exit Russia. So that cost us during the year, about $35 million of EBITDA. And we just actually, I think in the next 2 weeks, we're done paying the employees over there.

And what are your expectations for that region going forward? Is it a slower growth region in your view going forward?

Well, it's an important region for us, and it's 20% of our revenue. So it's definitely important for us. But just I think from a planning standpoint, I think it's very low, a couple percent GDP growth here as we move forward over like the next year. And we'll watch -- I think all the companies are looking that there's a recession coming. Again, I don't think anyone seeing any yet. We're not seeing it, but we're also doing scenario planning, just in case things do soften up, that we're ready to react quick to it.

What's your view on that potential scenario, a recession? And if it happens, how would you respond to that within DuPont?

Well, we would take some cost actions for sure. So we have all the teams right now lining up their thoughts on some actions we would take there. We'd be ready to go. Obviously, we'd really watch our supply chains closely because you got to watch your inventory levels. But yes, look, demand feels great still. But with the Fed doing what they're doing and all that, you just never know here. So I think preplanning to be ready -- and I'll give you a great example this year, and you know this, David, we caught all the inflation, $600 million. We caught it, covered all of it with price immediately, which I think says something about the value of our portfolio and the products we sell. We had no issue getting it when we needed it. And we've got it covered, we covered it last quarter, we'll cover it fully this quarter, and we'll clearly cover it for the year. So I think we thought ahead, we are ready to go and we acted and we'll do the same thing if we start to see some recessionary pressures.

Got it. And just thoughts on rising rates, and you do have some housing exposure via Tyvek and other products. How do you think that will play out from U.S. and...

Yes, look, yes, I think housing could -- residential could definitely slow down. It's not that big in our portfolio, but we do have it. But I -- my gut is the do-it-yourself part of that market, which is big for resell into probably still does very well. And then we're obviously in the commercial part of the business also. So -- but yes, you can definitely see some softening on the resi side with new construction. On the other hand, I think the long-term trend in resi is phenomenal. There's just not enough homes in this country since the '08, '09 downturn. So I think you might see some blips, but I think a general trend over the next decade is good.

Right. And overall, your order book visibility is about 4 to 6 weeks or a little bit longer, a little bit less.

Yes, it's a little longer. It varies by business. So we have more visibility in W&P. They have longer lead time in their orders, especially in water. Within water, we've got 6 to 8 months of orders on the books. And then in E&I, it's a little bit shorter, but we do have a nice look, at least 4 to 6 weeks out.

Got it. And you mentioned, raws. Are raws for you guys peaking in Q2?

It seems like it has, yes. I mean there's a little -- you never know on the energy front, what's going on. But nothing's going up anymore, but it's also not coming down. So it's a good thing we got the price and we're loaded. The interesting thing for all -- I think all of us managing companies is if the commodities start to come down, how much price can we hold on to? And we're very determined we're going to hold on to some incremental price over the cost move as things start to go. And I think with the type of portfolio we have, we'll be able to do it.

And that was my next question. Maybe by business, where do you have the best ability to hold the pricing? Where do you have maybe the least ability to hold the pricing?

Well, remember, the pricing we got was -- the big pricing we got in the new DuPont portfolio is W&P pricing was up 10% last quarter. So my gut is we hold some of that in all of those end markets. The interesting one, which is not a lot, but in the scheme of numbers, it does add up. We were 1% plus in electronics which is a big part of our portfolio. Normally, we're minus 1 on pricing. You lose a little bit with the older products when you're introducing new ones, and it's just the model. And now we're plus 1 to actually almost plus 2. And that's not that big a move we had to take to cover the cost. So can we hold that will be interesting, and I think we can hold some of that.

Okay. You mentioned supply chain issues getting maybe a little better. Is that still accurate or...

Yes, so a little better, but it's tough. Like the teams are working 7 days a week and getting containers booked ahead of time. It's crazy. Going into different ports on the East Coast of the U.S., instead of the West Coast and -- but we're doing fine. We're working our way through it. But it's not normal times, I don't want to win you with that impression, but it's just getting a little bit better and mainly because of the Chinese -- China, it was so bad, and that's easing up now.

And this will get better next year, do you think? Or who knows?

I think it's going to be a while, unless there's a recession. That kind of changes the whole picture.

Got it. Okay. Very good. Maybe on to some other topics. Rogers, a lot of discussion. The numbers have not been perhaps great out of the box. How is Rogers -- you haven't closed yet, how is that business progressing in your view over the last couple of quarters from earnings?

Yes. So their order book is very good. Now remember, they're exposed to auto and auto has been down from what supposed to be this year, and that's just semiconductor issues and all that. And they're exposed in China. So they had all the issues because of China, they had production issues, they had supply chain issues. We've been through it in detail with them. But we feel very good about the order book. They'll continue to improve as the year goes on. And they're getting a lot of wins in the EV space, which is really nice to see because EVs in the next 5 years, are going to -- they're booming. They're big in the ADAS, which grows 15 percent-ish. And then you look at the battery applications and all that. It's growing even more than that. So I think they're going to be on a nice run.

So is it fair that Roger's EBITDA will be maybe below expectations this year but in line with expectations for next year?

Yes, I think so. I don't think they'd be too far off the run rate of what we said. I think they'll be close by the time we get the closing of the deal. But clearly, like 2023 and all, we'll be in good shape.

Okay. So mainly you think supply chain issues, China caused a shortfall in the first half.

Totally.

Very good. And [ Sloan tractor ] close, late Q2, early Q3?

We're hoping the end of July-ish, beginning of August, somewhere in that time frame.

Okay. Maybe on the M&M divestiture, is that still on track to close by year-end?

That's what we're targeting, yes.

Okay. And the Delrin portion of that transaction, where do we stand with that remaining step to be divested?

Yes, we're getting ready to launch the process actually late this week, early next week. So we're moving along with that. We're positive on the outcome there. It's actually the highest margin piece of the original M&M portfolio. So originally when we went to market with the whole scope and then pulled out Delrin for regulatory reasons with the Celanese deal, the numbers that we put out suggests a low 30% EBITDA margin for that piece of the portfolio. So even above kind of where the average Du Pont margin is today. So it will be a nice asset for something.

It may be a higher multiple than you got for...

We're not going there. I had my neck on the line with the other thing that I said, including the delivery. I mean it was great. Look, we got 14.1x for the M&M portfolio, which was our cyclical business. It's great business, by the way, but very cyclical. And as Lori said, the best business in there was Delrin at 30% EBITDA margins, and we still have that. So a very good deal for us.

And you're expecting strong interest for that asset?

Yes. Yes.

Yes. Can you just comment on the Q1 numbers in M&M? They were a little bit below my expectations, run rate below some forecast out there, maybe just address those issues?

Yes. A big piece of it is back to the auto. Obviously, there pushing 60% auto exposed. So as the auto numbers in the first quarter, now even the second quarter, the IHS revised it down, I think, to about negative 2% growth in the second quarter. That was the main impact that drove their results. They're out getting price again. So their supply chain is still fluctuating, but that they still are out getting priced. The rest of our portfolio has pretty much stayed steady and the price that we have in place is what we expect to carry through the year, but M&M is out actively getting priced again because of continued escalation in their raw material base. So that's really what impacted Q1...

Especially natural gas.

Especially natural gas, yes.

When the Ukraine war broke out, natural gas went crazy. We had just finished price increases, I'm like, okay, we've got to -- and it really hits the M&M business, the natural gas. It doesn't affect much the rest of the portfolio. So okay, we're going again.

Okay, that's very helpful. Maybe just on PFAS. You had mentioned about the Q1 -- Q4 and Q1 call, you hope for some further progress this year on the South Carolina MDLs. Is that still your thought process?

Yes, we've been in conversations. You saw that the judge even said, let's -- come on guys, let's be talking here. The good news is Corteva, Chemours and DuPont have a sharing agreement in place now. So we're -- things can move along because we're cooperating with each other very well. We're kind of aligned as we move forward. So that was a good milestone for us and hope definitely make progress this year.

Okay. When you do resolve the South Carolina MDL portion of PFAS, what's left? I know these state issues, but how big are the remaining...

Well, there's 5 or 6 states that have natural resource claims like Delaware did that we settled -- I'm losing track of time, 3 months ago or something like that.

Yes.

$12 million or...

Yes, it was $12.5 million for -- it was a $50 million settlement, but the portion that DuPont paid was $12.5 million. And so there's 5 or 6 other states with natural -- and by the way, the legitimate ones where we had a manufacturing facility, and they're all -- they're in our filings and all. So we'll end up having those one-off settlements with 5 or 6 states. That to me is not -- that will just happen over time. The bigger issue is resolving and settling the water district cases. That's really the big part of the MDL that you would want to get settled.

Right. And that time frame is...

Hopefully this year.

Okay, okay. Maybe switching to the new remaining DuPont portfolio. How attractive is this portfolio from your perspective?

Yes, it's very attractive. Yes. So when we did the announcement back in November around the intent to divest the M&M perimeter and then acquire Rogers, we reset our financial expectations for the remaining portfolio, and our revenue top line growth rate went up 40 basis points. Our EBITDA margins went up, I think, 140 basis points. But the biggest piece that we'd like to focus on is the cyclicality. It went from 17% to 10%. So peak to trough EBITDA change. So that is very important to us. We're now more in range with the peer set with respect to cyclicality, very high-quality margin profile. So this portfolio should be in the high 20s outside the price cost inflation that we're seeing today that has a significant impact on margins. And so it's a high-growth end market. So we've really honed in the end market exposure that we have to 5 key end markets, half of which are above GDP, the rest are in line with GDP. So when you average that out, you're nicely above GDP top line growth opportunity. So we're excited about what pull we have. It's nice that we were able to pull out the M&M so that we could give investors a view of what we look like before the transaction actually closes. So moving that to disc ops, I think allows people to get their heads around the Remainco portfolio before we actually closed the deal. So it was helpful for us.

If you look at the growth rate, the EBITDA margin cyclicality and put it up against what any of you consider the best multi-industrial companies, we benchmark in the top quartile with the new portfolio. We did not before. We were very cyclical because of M&M. Everything else was steady, but then you had that thing fluctuating all the time. So -- and by the way, we traded, give or take, 10x. We sold M&M for 14x. So we have all that cash. That's a win-win for our shareholders. And now we've created this portfolio. We love the end markets we're in. That's what we've been working 5 years to get to. As Lori said, half of this portfolio grew nicely above GDP. They're great secular growth areas for us. And we -- and the fact that we have great R&D positioning in those end markets. So we are a key, key player for people which is why we can get price and why we can get EBITDA margins in the high 20s.

It gets back to the core story here. The entire discount, which is massive in my view is that just due to PFAS? Or are there other issues you think are weighing on this on DuPont?

So I'll just tell you what I hear from investors or potential investors, and I agree with this. It's definitely PFAS is an issue. But the bigger issue is we've been making so many portfolio moves for 5 years. It's kind of been hard for people to really -- okay, here is the portfolio. Here's how it functions. We've had 9 quarters now of beating everything we said we would do, and you know that. And we'll keep doing it. And I think people just need to understand the new portfolio now and really where we're positioned and -- in fairness, it's been hard to do. We've been through the DowDuPont merger. We created 4 companies at IFF, we got Dow, we got Corteva, which is doing great. And then -- but we still have been making all these moves to finally get DuPont to where we want it. And this is really the last big move we need to make with the M&M transaction. So I think now people can really like, okay, what is this portfolio? How is it performing? And I think that's the bigger issue.

No. It makes a lot of sense, and I agree. Any thoughts, Lori, on the...

No. I think if you go back to -- because we get a lot of questions about how the portfolio would perform in a downturn. So we can go back and look at the remaining E&I and W&P performance. And if you go to 2Q 2020 when COVID was the worst, our top and bottom line dropped very little in the exact same amount. So we were able to deliver very strong incremental margins, 31%, which was above the peer set. So that's an indicator of how we were able to -- how that portfolio is able to stand up better through a significant downturn in 2Q 2020 when the COVID lockdown was at its peak.

So again, going back to the portfolio, what is the sales growth, margin potential, maybe even incremental margin potential of this new revamped slimmed-down portfolio?

Well, look, I think in -- I don't know what normal times are, but in a normal economy, I would say this portfolio grows about 5%, which is what I would consider above normal global GDP. I think the EBITDA margins for -- let me just give a couple of pieces. For E&I, they should be 32% to 33% and more like 33% with the synergies we're going to get from the Laird and Rogers deal. So we get a little extra juice because of that. And then the W&P portfolio should be 27% to 28%. Now again, you've got to take price -- well, E&I was 31% last quarter even with the price cost problem. If you took that away, they were at 32%. So that's where they've been running, but we should be able to goose that up a little bit, again, with the synergies that are coming. And then W&P, I think without price cost was around 26% last quarter, but we should be able to run that 27% to 28%.

Right, okay. Are there any questions in the audience, please just raise your hand and ask away. Otherwise, I'll keep on going. We have a microphone here.

Thanks. Richa Harnain, industrials and materials sales specialist at DB. Thank you for doing this presentation. So I'm just curious on visibility, I know you spoke about the consumer remaining very strong right now in terms of your portfolio. But just last night, we had a profit warning from Intel. We've had some smart phone warnings, computer warnings. So just curious, with respect to visibility, how far out do you think you have that visibility? And do you think -- do you expect the consumer to crack maybe near term, just in line with some of those profit warnings we've seen in the market?

Yes. I mean I think, look, the visibility for us is about 2 months, okay? So we don't have a crystal ball pass there. It's interesting, and I'm watching this from a couple of other companies I'm close to in the electronics side. The demand has been so strong, and it's not just the consumer. It's data centers, it's 5G launch, there's so much going on in that space. And remember, for us, a big part of that is playing in the semiconductor industry. And all these new fabs are going up over the next 5 years, and we play very heavily into that. And the new fabs going up, by and large, are higher at the higher end. Semiconductor ships more dense layer, and that plays right to the strength of what we do. So will the consumer crack here potentially? Yes. That's why we're scenario planning. I'm not naive, I've been through a lot of these in my career. But we don't see it and we don't see it in that 60-day window where we kind of have the backlog. Order rates again, just from the last week still feel good.

Yes. We look at the book-to-bill ratio, too, and that still remains above 1%, so very strong. So -- and also, if there does start to become a little bit of a downturn, we have backlog in places we don't normally have backlog. So in the past, our largest backlog was in the water space, where we had 6 to 8 months orders on the books. For supply reasons, we're building backlogs and other portions of the portfolio. So it's some within the adhesives business that supplies -- lends growth into EV, some within semi. And so we have that piece too that if things were to slightly go down, we can start to reduce some of that backlog to keep this going.

Yes, 2 key parts -- Lori, made a good point, 2 key parts of our portfolio were sold out. So we could have other business if we weren't sold out -- well, actually 3 areas, our Kapton product line, which the new line is just coming up now. We -- that was one of our biggest CapEx projects, but that's been sold out and there's more business we're going to add. Tyvek is sold out, and a lot of our water assets are sold out. So we're doing a lot of capacity release efforts in the company while we're putting new capacity in place. So those areas, I think, will hold up very well if we start to see softness simply because there's other demand we can get there. But the consumer could easily crack here.

And then for people -- the Kapton product line is geared towards -- tell people what it's geared for -- geared towards.

It's technology use right now that the main sale for us is for the 5G antenna. So every phone is getting 5G, and we have the best technology to do that. So that's where we've been selling into. But there's a lot of other applications for it, like for -- in rail. In areas like that, we just haven't been able to go pursue because of lack of capacity.

Great.

So we're actually out right now and capped on -- customers are now just qualifying it. We had a key qualification approved. I think it was just last week, we heard. So it's the materials coming off the line good on our kind of preproduction runs, getting qualified, so we'll start ramping the lineup.

Great. Ed, thank you for that. Any other questions for Ed and Lori? Otherwise, I will keep on going. And Lori, on capital allocation, you're going to have some nice cash balances post M&M, Rogers and Delrin. You'll have 6 to -- more than $6 billion of cash to deploy. How are you thinking about that deployment going forward?

Yes, so back to the conversation a minute ago with our multiple at 10x. I am totally in the camp we're undervalued, and that's going to change over time for a couple of reasons we talked about. So I think we'll step pretty nicely on share repurchase. I think that's a smart move for our investors to create value. We will look at a couple of other tuck-in acquisition opportunities. Lori and I are in no rush to do anything, but there's a couple of areas we'd like to maybe do if we could. The numbers have to work for us. We've got to get the right returns out of it. But so I think you'll see a balance of that. But we're going to be pretty heavy, I think, on share repurchase. And by the way, if the world happens to go into recession, we're in a really interesting spot. I think we're, give or take, $7 billion of cash. By the way, we're underlevered to the target. We said we'd like to live around like 2.7x. We're down at 2.1, at 1-ish. So when you really look at it, we have the capacity for about $10 billion and still have a very comfortable balance sheet. So I feel good about where we're at, positioned.

Is the thought to wait until M&M closes? What's your thoughts on ASR? What's the thought process on timing and execution?

Yes, so we're doing -- we had just finished, as you know, the share repurchase that we had. We have an authorization for a new $1 billion one, which we're going to execute against through this year. But as we get into the fall, and I don't want to put an exact time, when we'll look at, okay, what are we now going to do because we've got the $7 billion or $10 billion capacity, we'll be closer to closing the M&M deal. Now Delrin will be 4 or 5 months later, maybe say, June of next year before we would get that cash because we're just starting that process. But I think we want to get closer, and then we'll take a look at it.

It makes a lot of sense. You mentioned M&A electronics. Maybe first, what does -- you bought Laird, Laird, you're buying Rogers. What is this new electronics portfolio? How does it stack up competitively in the marketplace?

Yes. It's -- one, I think it's the largest. So with the Rogers acquisition coming -- that came in, the E&I portfolio is north of $6 billion. So it's quite large, quite expansive. And we've got leadership positions across the portfolio. So very strong in semi and to Ed's earlier point, strong where the growth is. And so with all of the advanced nodes, I mean 90% of our product, I wanted to clarify, with the semi exposure is in the consumable space. And so we are not in the CapEx space for the most part. So if the CapEx cycles, we don't have exposure to that. It's all around the production of the chip and the amount of wafers produced. And so 90% of our portfolio is in the consumables to produce the chip. And so the more dense and the more layers the chip gets, the more of our materials they need to purchase. So a very strong position there. And with I think I saw between now and 2026, the average CAGR of semi fabs going in is like 7% to 8%. And we would expect to be north of that with where we're exposed from a chip perspective. Within Interconnect Solutions, one of the larger end markets there is smart phones and to Ed's earlier point around the 5G implementation. So very strong there. In Industrial Solutions, there's a mix -- a lot of mixed business underneath there. We had a teach-in a few months ago. We actually have our next teach-in next week in the shelter business. And hopefully, you guys are finding those valuable. But within Industrial Solutions, mainly industrial end markets, but very strong, and businesses that have very, very high margins that people didn't know were there. So we've got Kalrez and Vespel, very, very high margins above the E&I segment average. We've got a $300 million health care business that sold out above segment margins. And so very nice position, both from a product portfolio and from a competitor perspective.

By the way, Laird, just to give you the -- we've now owned that just about 1 year. And the synergies are a little above the $60 million that we had targeted. We're kind of around $63 million, $64 million but the business is doing better top and bottom line than we planned. So if you actually go back and do the math on a net basis, we bought it for 10x. That's a really nice business.

Good price. Rogers synergies, how are you -- I know you're doing some preplanning work right now. How are those looking as we speak?

Yes, we're really honing in the details on it now. There are certain areas we can't discuss yet with Rogers. But we kind of have, I would say, 75% of it really scoped out in detail. Now remember, a little bit different than Laird, Rogers being a public company. There's a lot of public company costs that go away like immediately. So that's part of the $115 million of synergies we're going to work towards, but we're ready to go. And we'll finish the rest of that real quick after we close the deal, have it totally identified by detail who's responsible, when is it happening, and really get on that.

What's been the feedback from customers on this new potential expanded portfolio?

Well, they like it because we're -- and we're already seeing this by the way with Laird. We have 1 big auto customer in Europe that Laird had a direct relationship with, we didn't. We went through distribution, and we've brought in one of our product lines, [indiscernible], along with Laird. So I think the customers actually really like this because just more tools for us. The strength of DuPont is we have very good R&D in these end markets we like, but we have application engineers that live with customers. I mean that's -- people don't understand that strength. And then you just bring more tools. The thermal management that Laird brings and then what Rogers is going to bring in EVs and we have a nice adhesive business already in DuPont for EVs. And you sit down with a customer and talk about here's what we can solve for you. It's very powerful. So that's why we've been so focused on bringing these pieces into the portfolio. It's a powerful electronics business that we have.

And do you like any technologies or products here to really make it -- take it even to the next level?

Well, one of the things we like and we haven't taken advantage of this year because we haven't closed Rogers, Rogers also brings us into some areas like defense, electronics, clean energy, wind mill technology, where we know we can bring some of the DuPont electronics technology to bear in those markets. So one of the things when we did the Laird announcement and then the Rogers announcement, the TAM, the opportunity for us, is expanded by about 50%. There's just different end markets. They had a core strength and we did not play in, but we have a lot of tools we can bring to that. So that's really another interesting area for us to focus on.

Okay. You mentioned there are some maybe bolt-on opportunities going forward in electronics?

There is -- I would put it in electronics that crosses over in applications into kind of industrial spaces. We would love to add on to our water business, by the way. I mean it grows mid- to high single digits every year. I think it's a secular growth area for the next couple of decades, and we have an unbelievable portfolio from a technology standpoint to cover that marketplace and with all the sustainability goals everywhere in the world now, it's just a great place to be. So if we could add on there, that would be an interesting area for us.

Great segue to the next question. W&P, maybe discuss how that portfolio has evolved where it is today, where the growth is now as a big expansion to Tyvek. Water has very large opportunities as well for growth. I think about that segment going forward?

Yes. So within the 3 segments and the pillars, so within safety, obviously, that has the tieback opportunity, which is the largest portion there. Within shelter, it's 70% U.S.-based, and so it's a large U.S. business. And it's about 40% residential, 40% commercial and then 40% DIY repair and remodel. But the North America exposure in the residential space is really in the lower southern states. And so that's where everybody is moving. And so it is a nice exposure from a geographic perspective. There's not as much in the Northern states that's losing people to the South. And so even if things maybe go into a slowdown, there's still a lot of opportunity for us to be able to capture growth. And then within water, as Ed had mentioned, we're looking to maybe do some selective acquisitions there to continue to round out the portfolio. But we've got the 4 key technologies. We're leaders in the 4 key technologies that address the filtration space. And with all of the desalination and the filtration opportunities that exist, we're really excited about the portfolio. So I think it's that margin expansion opportunity, as Ed had mentioned. And so if you normalize the Q1 margins, we were in the 26% range. It's got entitlement into the 27%, 28% range. So that's under our control. So that's margin improvement primarily. And so that's a nice opportunity for us too, to have that opportunity in our own portfolio regardless of the macro to continue to drive margin expansion in that business.

By the way, we did 4 acquisitions. They've made that water portfolio on top of the existing biz we had. We didn't pay more than a few hundred million dollars for all those acquisitions together, and it's turned into an unbelievable business.

Does it make sense however to separate out the business by itself, given how attractive it is and how high multiple that might attract from a sum-of-the-parts perspective?

Well, first of all, we're getting the portfolio where we want it. I don't think the multiple of our company is going to be 10%. So let's just see how things play out. People are going to have to really get to understand it, as I said earlier, we resolved PFOA. And I don't think we're going to be trading at 10x forever.

Right, I agree. Last 1.5 minutes. ESG, how is this portfolio set up to benefit from the change we're seeing on an ESG perspective, climate change, et cetera?

Very nice. I mean, obviously, with the piece that we just talked about with water, with all of the clean water opportunity that exists across the portfolio, all of the connectivity that's going on across the space really is a sweet spot for our electronics portfolio to enable that connection within the EV space. As we had talked about today, we have EV revenue of about $400 million. And so that's a nice pocket to continue to grow, with growth pushing 30% potentially within the EV space. And so I think the latest number I saw with respect to EV is 18 million vehicles by 2025 will be electric. So that's a significant step change from where we are today to that growth opportunity with only a couple of years out. So a nice EV application. We have I think we put in place a compensation modifier with respect to ESG to drive behavior across the organization. And so we have -- with our annual variable comp payout, there's a modifier that we could participate in if we have above-average performance in our ESG goals. And so there's a lot of opportunity that we're excited about from that perspective.

Our portfolio actually aligns up very well against the UN sustainability goals for 2030, just what we sell into and what we do, it's very interesting how it lines up there. And by the way, you'll hear in the teach-in next week, even shelter, we've had a lot of efforts on the sustainability front because our customers are demanding it. But we have solutions to offer them. It's very impressive.

Last question. What are you most excited about? What are you most scared about right now?

I'm actually not scared about anything. I wanted to get M&M sold, and we did. So that was a big thing for us. So obviously, we've got to get to cash and all that. And I'm really excited about the new portfolio and people understanding it. I mean that's where we're at now. And I think we've got to get a little closer to getting the deals done and all that, I get all that, but that's really exciting. For me personally, just so you hear, I'm on PFAS every day to get that to a resolution. So that's very, very important for us also.

That's great to hear. With that, we'll stop there. Ed, Lori, thank you very much.

Great. Thanks again.

Thank you.