Ladies and gentlemen, thank you for holding, and welcome to the Analyst Call Q1 2020 IMCD Results. At this moment, all participants are in a listen only mode. After the presentation, there will be an opportunity to ask questions. I would like to hand over the conference to Pete Vanuslicken. Go ahead please, sir.
Yes. Thank you very much, and welcome, everybody. As usual, I'm here with Hans Kormals, our CFO, and we will answer your questions in a few minutes. First, some remarks from my side, and then Harald will take you through the key financial numbers. We spoke with each other on February 27 as we released our annual report 2019.
The corona crisis was already there, but not yet in an unprecedented form we now experience. As you know, we as management of IMCD, we're always quite reluctant to give guidance on future profit development, and these events show again how fast and unpredictable things can happen. You will appreciate that under these circumstances, we are even less inclined to give an outlook. We already informed the market on April 7 that we did not observe negative impact of the corona crisis in our Q1 results. These results are strong with revenue and EBITDA growth in all regions.
Overall, revenue grew with 6% and EBITDA with 11% to €17,900,000 Cash earnings per share increased to 13%. We cannot rule out that in particular in March, stock building took place by part of our customer base, which in that case had a positive effect on our numbers. However, we can't verify whether this actually has happened and to what effect. During March, largely in the second half, lockdowns and restrictions were implemented in almost all countries where IMCD is active. IMCD has been designated in most of these countries as essential, and our company, therefore, remains open for business.
Of course, the health and safety of our staff is absolute priority, and we have adopted everywhere safe working practices. This means, in practice, that most of our people work from home. It is gratifying to see that this is made possible because of our robust IT and digital infrastructure. This situation continues for the time being, and only our colleagues in China are back in the office. We are very proud of our staff worldwide.
They have reacted significantly on this unprecedented crisis. IMCD has not applied for any financial assistance offered by government programs anywhere in the world, nor do we intend to do so. Although Q1 was strong, we expect to see impact of the crisis in the coming months. In some of our business segments, a certain number of customers have closed or are affected by the crisis leading to cancellation or postponement of orders. We monitor this closely day by
day. We expect that
this will affect our revenue. Other business segments do not experience this and even see increased demand. It is impossible to predict how these effects will develop as it is largely dependent on government policy regarding lockdowns. In this respect, we see also differences per country. And in some countries, government measures have been disruptive to the supply chain.
Assuming that this crisis will not go on forever, we expect that we will get through this period with not too much harm, and we then hopefully can resume our growth path. I'm CD is strong and resilient, and its diversified activities prove this again. We at IMCD are committed to ensure the continuity of the business for the benefit of our employees, our commercial partners, our customers and our shareholders. Now Harald will take you through the Q1 numbers, and after that, we will answer your questions. Harald?
Thank you, quarter results, but I would like to start off on Page 9 of the presentation. As mentioned by Pete, we are happy to report a 6 percent revenue and a 12% gross profit increase in the Q1 of this year. The gross profit increase was a combination of 7% organic growth and 5% as a result of the first time inclusion of acquired companies. Gross profit as a percentage of revenue improved from 22.4% to 23.6%. And this increase in percentage was a combination of product mix effects, changes in local market circumstances, currency changes and gross margin improvement initiatives.
Operating EBITDA decreased 11% to €70,900,000 This increase was a combination of organic growth and the first time inclusion of acquisitions. The operating EBITDA margin increased from 9% in the Q1 of 2019 to 9.5% in the same period this year. The conversion margin calculated as operating EBITDA as a percentage of gross profit was 40.2%, which is slightly lower than the same period last year. In EMEA, we had a conversion margin just below Q1 last year, but much better than all other quarters in 2019. In Asia Pacific and the Americas, we were able to further improve this ratio.
Net result before amortization and non recurring items increased 13% to CHF 15,200,000. Free cash flow and cash conversion ratio both decreased compared to the same period of last year. Substantial operating EBITDA growth in 2020 could not fully compensate the increase in working capital in the 1st 3 months. This working capital investment of about €36,000,000 was mainly the result of increased business activities. Net working capital translated in days of revenues of 54 days similar to the Q1 of last year.
Year to date cash earnings per share were €0.94 an increase of 13% compared to the same period of last year. And on the last line of this page, you can see a 9% increase in our number of employees. Most of this increase is the result of the first time inclusion of acquisitions. On the next page, Slide 10, you will find gross profit, EBITA and conversion margin for operating segment. EMEA reported 7 percent ForEx adjusted gross profit growth and 6% operating EBITDA growth.
Operating EBITDA as a percentage of revenue improved from 10.2% to 10.5%. The growth is a combination of organic growth and the impact of the acquisition of DCS and Cifroni. Further, Q1 includes a bit of start up cost of our new venture in Dubai. In the second column, the results of Americas. In Q1, Americas increased gross profit and operating EBITDA, both with 15%.
Most of the growth is organic and amongst others driven by an increased GM percentage. Asia Pacific in the top column reported 26% gross profit growth and 27% operating EBITDA. This was a combination of organic growth and the first time inclusion of acquisitions. Operating EBITDA as a percentage of revenue was comparable with last year and by the conversion margin further improved. And in the last column, you will find the cost of the holding companies.
And as you know, this includes all non operating companies, including the head office in Rotterdam and the regional support offices in Singapore in the U. S. On Page 11, a short summary of IMCD's free cash flow. Free cash flow and cash conversion ratio were both lower than the same period last year as a result of the increased working capital investment as indicated before. And as mentioned, this working capital investment is mainly the result of increased business activities.
Working capital translated to days of revenue remained stable. On Page 12, a short update on net debt and leverage. And for information purposes, we separated the IFRS 16 net debt. And as you can see, reported leverage ratios and leverage based on the definitions in the loan documentations stayed at 2.82.6 times. The 2.6 times leverage ratio is well below the lowest 3.5 times leverage threshold in IMCD's loan documentation.
And last but not least, on Page 14, you will find our outlook for 2020. So far, the short summary of our year to date financials, and Peter and myself are happy to answer your questions. So operator, you can open up the lines again.
Thank you, sir. Ladies and gentlemen, we will start the question and answer session now. The first question is coming from Rajesh Kumar, HSBC Bank. Go ahead, sir.
Hi. Good morning, gents. Thanks for taking the question. Just in terms of incremental discussions with your customers, what are the types of demand scenarios that you examined? Obviously, you are exposed to quite a lot of very defensive sectors as well, But there is a large segment of industrial exposure.
I'm sure you must have had some discussions with your customers in terms of various outcomes in terms of economic growth in the second half of the year? If we could get some color, that would be very helpful. 2nd is just in terms of have you had discussions with your suppliers and customers about the level of inventory they require you to hold to assure them of some supply continuity?
Okay. Thank you, Andreas. On your first question this is Pete. On your first question with respect to customers, of course, as you indicated yourself, it's a wide area. It is clear that and we're talking now about the current situation, not on let's say, not on the 1st 2 months.
It is clear that, of course, certain customers have either closed or are postponing orders depending on the local situation. In particular, the industries that are obvious like in our case, the coatings, construction, advanced materials, industries that have a link to the automotive sector have, of course, all these issues of lower demand or even closure. So there, we will see the effects of that. On the other hand, of course, in the other segments, like pharmaceuticals, Food and to a certain extent also in Personal Care, but to a lesser extent, I would say, because also there we see here and there are closures. We see, of course, increased demand.
So various wishes of customers, various situations of customers, and that's also I indicated in my introduction. As to sourcing or discussions with suppliers, I would say that by and large, there's no difference in terms of what our relationships with what it was before. Here, of course, you have suppliers who have full demand and are producing on full capacity and others that are not. So in particular, with those who have full capacity, we are discussing how to about lead times, etcetera. But also here, differences in the way we interact with our suppliers.
I hope this gives you some color.
Absolutely. This is very helpful. Just when you look at the portfolio of customer exposure, so you said what $0.55 or something like that are industrial customers, dollars 0.45 is pharma and food. So then if you look at the exposure and the relative growth rates, I know you don't like to give a forecast and time, especially it's more difficult. But just in terms of looking forward, are you comfortable with where the market expectations are coming out at the moment?
Or do you think people are still too optimistic?
I'm not sure what you referred to, what kind of expectations. And of course and that's the difficulty, Rajesh, is how long will this, let's say, lockdown situation in the various countries take place and how much easing of that will take place. And I think if you look at various countries, then we see different outcomes also. But there are certain areas where the restrictions have been becoming a little bit more or less. And I think the announcements have come in today also with certain countries.
So it depends very, very much on how fast countries will ease the restrictions. And if this takes 1 or 2 months, And we will notice that, but I think that the harm is very relative. But I think you and I don't know how fast we're going back to opening up, as people call this, the economy. And that makes it for all of us, I would say, impossible to predict. Other than that, we also work in many industries that are open now.
So that is then a pause to, but I find it very, very difficult to predict what the next coming, like how fast economies are opening up. I think if you look at certain countries like China, we see activities increase quickly. But that is, of course, for us not a, let's say, major country in our portfolio. Other countries that are very restrictive, we see absolutely reduction in activity. So it is a very mixed picture and impossible to predict how fast we are back on track.
But I'm not very pessimistic if I hear the sounds of governments and that we see in the next 2 months may due resumption of activities.
The next question is from Peter Olofsen, Kepler Cheuvreux, Bauer
Yes. Good morning, gentlemen. My first question is on the Americas, where the gross profit growth and gross margin was pretty strong.
You mentioned a couple
of factors, including product mix. To what extent is this the, you could call, quarterly fluctuation in demand and mix? Or is there a structural element where you have been able to win new distribution rights, have been able to add new products to your portfolio, which has been helping your overall mix? And then a question on working capital. Overall for the Q1 in terms of number of days, it's pretty stable versus Q1 last year.
But looking specifically at inventories and receivables, if you're seeing any weakening there in recent weeks where maybe it's become a bit more difficult to collect receivables or areas where you have seen some more buildup of inventories?
Yes. Peter, your remarks, your question on the Americas, I think you're right. It is a mix effect that we see there. We see also an effect of putting Ityhorn into our global Americas organization, so some more visibility that helps us. And also, there a small change in also relative to Ity Horn in the way we account.
But it's so it's of various factors, but I think we are positive about the direction of the margin. And that is, of course, also something that we really focus on. On working capital, I think that all of us are confronted in the economy with customers that will struggle or ask for extended payment terms. I think IFCD has been very strict. We pay in time to our suppliers, and we also expect payment in time for from our customers.
We will have to see how that develops, but it's obvious that, of course, this is a important point of attention as are the inventories as some of our suppliers are also on full capacity. Is this giving your view?
Yes. So basically, it's not that it has dramatically weakened inventory turnover or DSO in recent weeks?
No, no. Peter, Hans. No, we talk about exactly the same days when you translate it in days of revenue.
And just going back on your answer on the Americas. So product mix, it's still not fully clear whether this is just the normal volatility or fluctuations that you have from quarter to quarter or whether there is a structural element to that improved product. Is there a meaningful contribution from new products that have been added to the portfolio or new distribution rights that you have secured?
Well, we have to see how, let's say, the volatility issue or the mix issue has played a role in this. It certainly has because we see in certain segments, of course, increased demand and in others, a bit less. But again, it's also part focus of the organization. But it's a bit early to say. So let's see what the next quarters will bring.
We certainly if situation comes back to normal, we probably will see maybe a slight reduction, but we will see.
Okay. Then my final question on Asia Pacific, which seems to have had quite robust organic growth this quarter. Were there particular countries or end markets have broker growth?
Peter Hans here. I think it's fair to say that as Pete indicated before, we have, of course, a bit of a China impact in that region, but China is pretty small. They had a very weak Q1. But other than that, most of the companies performed positive.
The next question is from Mudro Kundergan, ABN AMRO. Go ahead, sir.
Yes. Good morning, Pete. Good morning, Hans. And thank you for bringing the results forward. A few questions which I'd like to ask 1 by 1.
First, on your gross profit, you indicate that gross profit growth was 7% over the quarter. Can you share with us how the development was per month in the Q1?
No, I don't think so. No.
No. No.
And before you know, we start to think about weeks. No. And working days and things like that. I already hate to talk about quarters. Quite frankly, I wouldn't even know at this moment.
I mean, I have to look at that. But I don't if you want to, let's say, infer that it is suddenly spiked, then I can say no in this quarter.
Okay. That was a good thing to add. And then, yes, the $1,000,000 question in Q2.
I know you don't want to
talk about current trading and you see pluses and minuses within your wide range of activities. So the net effect, I mean, I assume that is negative. I mean, can you at least confirm that you're seeing a negative organic gross profit growth so far in April?
Let's say, if you look at the positive effects that I indicated and the negative effects and the negative effects, how do you say, are stronger than positive ones.
Yes. Okay. Thank you. And then yes, as you said a few times, and I fully agree, I mean, no one knows what's going to happen. So maybe it's an idea to talk about scenarios.
So do you have various scenarios in place and your response to, let's say, a significant downturn in the economy? I mean, if we look back at 'eight, 'nine, I know that you were able to offset a large part of your organic gross profit decline. I mean, how are you looking at I mean, obviously, your business mix has changed. You're now in the Americas. So what kind of mitigating actions can you take?
Have you started taking to offset any negative organic gross profit growth?
We have, of course, the usual let's say, on the cost side of our business, we have to, let's say, prudence in recruitment. So we won't do that when unless absolutely necessary. We are not a company that would easily take drastic measures in cost cutting in personnel. I think our people have done, again, as I said, fantastic and we rely on them. And we are one team and we will get through this.
We have, of course, other operating costs like travel. That's we have all I think we all experienced that we need that we can travel less. So that will save us. Other than that, there's not a lot that we can do or should do to overcome this. And it's, of course, clear that if the economy stays closed for another year, yes, then all of us are in a totally new situation.
But if this is a temporary thing, then I'm pretty confident that we will get through this in good shape. And so very, very drastic measures are absolutely not in our scenarios. We have made scenarios. These scenarios are also quite drastic in the sense of the downturn that we have modeled, and we still feel comfortable and confident that we will also overcome that.
That's good to hear. Final question on those scenarios. I mean, what kind of organic gross profit growth can you take, so to say, or can you offset with lower cost before you start to see an organic EBITA decline?
That is the nice thing of creating all kind of Excel sheets with forecast and models is that you can put in a lot of variables. And we play, of course, with what will happen to revenue growth or decrease, what will happen to the gross margin percentage. The good news is that our 3rd party cost as we outsource most are variable cost for us. What will happen to the cost structure, as Pete said before, we are not in the mood to fire particular to scale down organizations. But for sure, there is some flexibility in their thinking, for instance, about bonus, cost travel, PR, exhibitions and so on and so forth.
And before we can take quite an enormous hit, but before we run into real difficulties there.
Yes. Okay. Thanks, guys.
The next question is from Mr. Stephen Golden, Deutsche Bank, Telstra.
So just three questions from me. Firstly, can you tell us what underlying volume growth was roughly? I mean, I'm just backing out the impact of the margins on organic GP. Obviously, there's a number of moving parts. But roughly, it looks like volumes are kind of flattish.
Is that basically sensible?
Yes.
I let's say, we look at it, but but I would even say we don't look at it because, I mean, if we look, for example, in our general chemical department, which are a bit more volume type of products, then we see, of course, there more a decline than elsewhere in pharma or in the much less volume. So it doesn't say us a lot, to be honest. So I wouldn't look at that as an indicator for our business.
And so second question would be, obviously, the conversion margins were pretty flattish year over year. I mean given that the gross profit growth was kind of largely margin driven, so we'd expect a reasonably high drop through, is there any reason for this? Were there other costs maybe that you saw such as having to use more F rate, for example, or anything else? I'm just wondering why we didn't see more of an impact at the conversion margin level.
I think that it is a valid question, Steve. I think if you look at the cost base that we show, we show quite a prudent number here. You will see the full year impact of people that we added to the organization in the course of last year. If you look at the outcome, of course, we provided for things like full bonuses and these type of things. And then there are the usual swings.
And if you look at 3rd party cost. In a lot of cases, we discuss with customers who will take care of transport, who will pay for it and where it ends up on the P and L lines. But I think the good news here is that if you look at the EBITA margin, which is internally a more important indicator than conversion ratio, you see improvement on the EBITA percentage, percentage of revenue.
Okay. Sure. Sorry, just to clarify. On those 3rd party customers, you're saying it just very much depends contract by contract as to who takes those? Or are you saying that, that's often the problem of the end customer?
No, no. We have a lot of customers' full transparency about our transportation cost as part of the cost price. And in some cases, we also leave customers if they want to decide to pick it up themselves or if we deliver to them. And of course, these type of these are the usual fluctuations that we see in a quarter that every now and then, it's more efficient for them to pick it up themselves. And then you see just changes in where it ends in my P and L lines.
And therefore, it sounds funny perhaps, but conversion margin is a ratio where internally we don't look at. We look at own cost versus added value. And then added value is margin of the transportation cost. And there, we see an improvement in Q1 versus last year. And that is reflected in the outside world in operating EBITA margin improving compared to last year.
Right. That's helpful. And just last question for me. You said at the start of the call that you had no intention to use government wage support schemes. Can you I mean, if things clearly do slow and you're seeing significantly lower volumes, might that decision change?
And why is there clearly no intention at this point? Is it just to do with dividends or potential government interference in the business later on after the crisis? Can you just give us a bit more color there?
Yes. No, it's a good question. I think, first of all, of course, you don't need it. Secondly, I think as long as you are able to keep your own plans up, then you should do that as a matter of for me, it's and for us as management, it's a matter of principle also. I think that there are somewhere in the world, not in the Netherlands, but somewhere in the world possibilities, but we don't do that.
Listen, if the world falls down or the sky falls down, yes, then we have to look at that again. But I think that if we get into these problems, and I think many, many, almost everybody else as well. So I don't think that's a likely scenario. My feeling is as long as you are able, as a private company to finance your own business, then you should do that. And I think that's an important principle, because that's why we are private companies.
And yes, that will also, of course, enable us to do what we intend to do with our business, dividends and what have you.
Okay, understood. Thank you. That's very helpful.
The next question is from Matthew Yates, Bank of America. Go ahead, sir.
Hey, good morning, everyone. I've got a couple, please. The first is just a practical question in terms of you said most of your staff are able to work from home. Is there any impact on the business from less access to the formulation labs not having the customers there? And how long would it take for that to come through into less revenue opportunities?
The second question is just around the balance sheet. Obviously, last month, you proactively increased and lengthened the size of your facility. Was that done with something in mind in terms of an opportunity you think there is to put capital to work?
The first question, Matthew, is on labs. We have here and there still labs that are operational in the sense that people work in these labs with the proven distance or in shifts. And but it is, of course, it's, of course, true that, let's say, the things that we do in these labs, also customer seminars and etcetera, have not taken place. What we have increased is webinars, formulation, gatherings, digital, etcetera. So we try to, let's say, replace that with digital means.
And I think so far, it's going well. On the balance sheet, I think what I can say is that we did this, of course, prior to the crisis that this started, this financing prior to the crisis. And yes, we continue to look for opportunities, but it has not been done with something very specific in No, it was creating more flexibility in the balance sheet, making use of lower interest options to reduce the interest margins that you pay to the banks. And we like to have a bit of flexibility there.
And while I've got the chance, I'm going to squeeze 1 more in. I think you talked about opening up an office in Dubai. Can you just remind me what your Middle East footprint is today?
Well, it's very limited. We have a business in Egypt, which is, by the way, it's growing. It's growing very nicely. And we other than that, Israel since a couple of months. But we are not in the active in the Gulf region.
So that's why we opened this. We get a lot of requests also from our suppliers. We will we have started in pharma now in the region, both in Egypt and the Gulf. We will expand that also to other segments. And so it's a small footprint growing.
Our next question is from Kjerijn Mulder, ING. Go ahead, sir.
Yes. Hi. Good morning, everyone. On Street, maybe a question on the gross margin and EBIT. EMEA, gross margin was up by €5,000,000 EBIT only by 1, probably that's related to Dubai, but I think it's not the full reason if I take also into account that your integration of VLOCS started, let's say, last year and it is probably not finished.
So can you give me some indication about how the development is there and what is the reason for the let me say that the gross margin was more followed by the EBITA margin?
In absolute numbers, yes. So I tried to say that in more general terms in one of the previous questions because then your next question could be how is it possible that your operating EBIT margin in percentage of revenue goes up. But you then also need to look at the lines in between and this third party cost, wages and salaries, provisions for doubtful debtors and so on and so forth, other operating income. So what we see in EMEA is, on the one hand, we benefit from what you rightly said, cost savings as a result of the integration of VLOCs. At the same time, we added a few acquisitions.
We added staff during the year last year. We did full bonus provisions and other things. There were some changes between how we present things on gross margin and on third party cost just due to operational changes as a result of the indirect integration of the VLOCs activities. And that all played a role on how the numbers in Q1 came out.
Okay. And with regard to the Far East, is it correct to assume that your organic growth was about 50% in the Q1?
Yes. We don't give a split in the quarters in the regions between organic and M and A. What we have in the M and A side in Q1 in Asia Pacific is for sure the Waiwong acquisition, a pharma business that did pretty well in the Q1. And we had some activities in India and Singapore that were the first time in the numbers. I don't know, out of the top of my head, Kiran, the split between organic and acquisitions, but we have a substantial organic growth as well in this region.
The next question is from Edward Donahue, One Invest. Go ahead, sir.
Good morning, gentlemen. A few on my side, if possible. I apologize if I missed the opening presentation comments. I was a bit late going in. Could you just talk about the trends during the quarter with regard to order frequency?
Any particular divergence within the various sectors that you alluded to earlier in the presentation? Just to get an idea of how you were sort of exiting the quarter. And I know you don't like to give detailed detail, but some sort of momentum would be useful to know. Thanks.
Well, it's obvious, of course, that, let's say, during the quarter, there were changes. I mean, we started normal, as we all did in January, to a large extent also in February, with the exception of China, where, of course, then the business more or less stopped, more or less equal to Chinese New Year, and it didn't resume. And I think in March, we saw everywhere or in many places, in Europe, 1st and foremost in Italy, of course, a lockdown situation. Strangely enough or maybe also thanks to the creativity of the Italians business went on from home. We had very, very good result also in Italy.
And yes, what I said in my introduction was that it is possible, but very difficult to verify for us that in the last month of this quarter also some stock building took place, which means increased orders. We saw, of course, in the United States, later in the month also the COVID crisis having an effect, closure of businesses. And I think, let's say, the fuller indications will be felt in the next 1 or 2 months. So yes, and differences, of course, as I said, also in the introduction, all the more industrial businesses and the more life science businesses, which showed very good activity.
Okay. And then just going back to your point earlier, you were talking about on the question scenario planning. Assuming I mean, I'm just making this up, you have scenarios 1 to 5 of level of intensity. I mean, are you staying within the parameters of the early scenarios, I. E.
Less drastic? I mean, looking at the numbers so far, we imply you're at the lower end of a scenario planning. Are they staying within with what you would have expected? Or are you seeing actually divergence that's plus or minus within that scenario?
No, I think that we will stay within, let's say, the scenarios that you indicate. So I think that even in a more drastic situation, we will continue in the way we do.
Okay. And then just a final question. If you look and just you made a comment on Personal Care. Was that again something that you expected a slightly bigger performance coming out of that area or what?
The performance is still very satisfactory. But I think we all saw that some of the manufacturers have closed in certain countries, I think in particular in the makeup industry. And secondly, that has to do with demand. China is an important market also for products that are produced elsewhere, in particular also in Europe and that market also decreased. So that is also an effect that you will see.
And that is what happened. But notwithstanding that, we still had, let's say, good results in that segment. But it is it's a segment that is, let's say, a bit more vulnerable for demands and also in this particular crisis than the other Life Science segments.
And just on that Life Science, did you have the ability to scale up as the demand rose? Okay, so no bottleneck issues there at all. No. And I'm going to be very greedy and take a last question, I promise this is. Everyone talks about the situation with the virus, which is logical.
But could you just give an idea of how I know you just said January, February were okay, but how are they tracking versus what you're planning put in the end of last year, just to get an idea of cap side and positives as a positive note?
Yes. But what I don't want to do is now trying to split the months the quarter in months. We're doing we were doing okay, and the whole quarter has been okay. So let's keep it with that.
The next question is from Hakan Liana, APGAM. Go ahead, ma'am.
Yes. Hi, good morning. Thanks for taking the question. Can you hear me?
Yes, I can.
Yes. Most of my questions have been answered, but I have just 2 left. If you could please confirm to me what was your cash position at the end of the quarter and your RCF utilization? And if that has changed a lot through the 1st 3 weeks of April, please? That would be my first question.
Question. I think what you can see on the leverage levels that we report that the cash position should be more or less similar as what you reported at year end. And your next question is what happened in the 1st 2 months of this 1st 2 weeks
of Yes. Well, basically, well, you're talking about then you have like €100,000,000 cash position at the end of the Q1. And what is the utilization of the revolver at the end of the Q1? And is that changed a lot during the 1st 3 weeks of April.
No, there were no major changes there. And I think it is reflected in the number of working capital days and the Yes. I don't think we are that specific in the press releases. I think if you look back at our annual accounts last year, I think we had an we reported there an undrawn position of around about €200,000,000 We added 100,000,000 euros And then I think it's easy to do the math.
Okay. And in that timeline now that the economic environment has turned a lot more uncertain, have you considered substituting your reliance on RCF from some more long term
debt? Sorry,
I missed your question there, to be honest.
Yes. No. Because
if you look at the loan structure that we have in place, we have a combination of long term debt and RCFs. We created a bit more flexibility in the loan structure by adding RCFs. For sure, the long term debts are fully drawn because it's but it's a short chain. It's the standard steps that we have in the market and the only flexibility that you then have is on the RCF.
Yes. Well, basically, that's the question you have considered to substitute RCF from another bond potentially.
There is no need to make the change at the moment.
Yes. And my last question would be on M and A. I know you spoke about your strategy. Is there a budget that we can have in mind this year of transaction for the due diligence is already in a late stage?
We yes. Well, I don't want to give specifics on that, but we are as we always say, we have a pipeline of possibilities. We are working on some of them. It's also clear that some of the others are, let's say, hampered by this crisis because sometimes you need to travel also. So some of them will be postponed, some of them we will continue.
Okay. Thank you. Those were all my questions.
There is a conditional question coming up from Claire Lion Miller, ING. Go ahead, sir.
Yes. On last year, Q1 was quite strong related to, in my view, the Brexit, for example, as that was originally planned for the 29th March. And
then you
let me say, you had an idea about the there was some stock building then. This time, it looks like that you are not so certain about stock building. And it has probably to do with your policy to be very carefully operating with regards to certain clients. Can you give me an indication about the whole story with regard to the stock building?
Yes. It's very difficult. I mean, if you have 40,000, 50,000 customers, you cannot look behind their warehouses and see how much stock they have. It's impossible. It's not a willingness.
But it's just impossible to do that. And then this is all across the world in all kinds of different market segments. We can't see that in countries like and you refer now to the U. K, that's one country. It's a very specific set of circumstances.
We had a bit of a more of a feeling. But now generally, over all these markets in all these different regions, it's very, very difficult for us to understand that. If we see, of course, in certain segments, significant growth, then that is a little bit our deduction, but it is not something that we can verify.
Okay. So, okay. This is a deduction and not let me say that there's not
a real proof of that
of building that.
No. No.
Okay. No, no. That's thank you for clarifying that.
Gentlemen, there are no further questions at this moment. Please proceed.
Thank you. Then I will share oh, yes, sorry, I have to close. Thank you all very much. I hope you stay healthy. And I see I we speak to you next time.
So enjoy the sun. Bye.