Ladies and gentlemen, thank you for holding, and welcome to the analyst call Q1 2020 IMCD results. At this moment, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. I would like to hand over the conference to Piet van der Slikke. Go ahead please, sir.
Yeah, thank you very much, and welcome everybody. As usual, I'm here with Hans Kooijmans, our CFO, and we will answer your questions in a few minutes. First, some remarks from my side, and then Hans will take you through the key financial numbers. We spoke with each other on February 27, as we released our annual report 2019. The COVID-19 crisis was already there, but not yet in the unprecedented form we now experience. As you know, we as management of IMCD were 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 COVID-19 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 EUR 70.9 million. Cash earnings per share increased with 13%. We cannot rule out that in particularly in March, stock-building took place by part of our customer base, which in that case had a positive effect on our numbers. 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, our company therefore remains open for business. Of course, the health and safety of our staff is absolute priority, 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 magnificently 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. IMCD 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. Hans will take you through the Q1 numbers, and after that, we will answer your questions. Hans?
Thank you, Piet. Good morning, ladies and gentlemen. As usual, a short summary of the first quarter results whereby I would like to start off on page nine of the presentation. As mentioned by Piet, we are happy to report a 6% revenue and a 12% gross profit increase in the first quarter 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 in percentage of revenue improved from 22.4% to 23.6%. 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 increased 11% to EUR 70.9 million. This increase was a combination of organic growth and first-time inclusion of acquisitions.
The operating EBITDA margin increased from 9% in the first quarter of 2019 to 9.5% in the same period this year. The conversion margin, calculated as operating EBITDA in 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 results before amortization and non-recurring items increased 13% to EUR 15.2 million. 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 first three months. This working capital investment of above EUR 36 million was mainly the result of increased business activities.
Net working capital translated in days of revenues was 54 days, similar to the first quarter of last year. Year-to-date cash earnings per share were EUR 0.94, an increase of 13% compared to the same period of last year. On the last line of this page, you could 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, EBITDA, and conversion margin per operating segment. EMEA reported 7% Forex adjusted gross profit growth and 6% operating EBITDA growth. Operating EBITDA in 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 Zifroni. 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 third 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 in percentage of revenue was comparable with last year and by the conversion margin further improved. In the last column, you will find the cost of the holding companies. As you know, this includes all non-operating companies, including the head office in Rotterdam and the regional support offices in Singapore and 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. As mentioned, this working capital investment is mainly the result of increased business activities. Working capital translated in 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.
As you can see, reported leverage ratios and leverage based on the definitions in the loan documentations stayed at 2.8x and 2.6x . The 2.6x leverage ratio is well below the lowest 3.5 times leverage threshold in IMCD's loan documentation. 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 Piet and myself are happy to answer your questions. Operator, you can open up the lines again.
Thank you, sir. Ladies and gentlemen, we will start the question and answer session now. To be registered for the question and answer queue, please press star one. Press star one for your questions or remarks. 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 have 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. Second is, just in terms of sourcing, 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, Rajesh. This is Piet. 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, let's say, not on the first two months. It is clear that of course, certain customers h ave either closed or are postponing orders depending on the local situation. In particular, 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.
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 personal care, but to a lesser extent, I would say, because also there, we see here and there closures. We see, of course, increased demand. Various wishes of customers, various situations of customers, and that's also what 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 our relationships with what it was before.
Also here, of course, you have suppliers who have full demands and are producing on full capacity and others that are not. In particular, with those who have full capacity, we are discussing about lead times, et cetera. There's 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 your portfolio of customer exposure. You said, what, 55% or something like that are industrial customers, 45 are pharma and food. If you look at the exposure and the relative growth rates, I know you don't like to give a forecast, and this 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 refer to, what kind of expectations. Of course, and that's the difficulty, Rajesh, is how long will this, let's say, lockdown situation in the various countries take place? How much easing of that will take place. I think if you look at the various countries, then you see different outcomes also. There are certain areas where the restrictions have been becoming a little bit more less, and I think the announcements have come in today also with certain countries. It depends very much on how fast countries will ease the restrictions, and if this takes one or two months, then we will notice that. I think that the harm is very relative. I think you and I don't know how fast we're going back to opening up, as people call this, the economy.
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 positive. I find it very, very difficult to predict how fast economies are opening up. I think if you look at certain countries like China, we see activities increase quickly. 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. It's a very mixed picture and impossible to predict how fast we're back on track. I'm not very pessimistic if I hear the sounds of governments and that we see in the next two months may do a resumption of activities.
Understood. Very clear. Thank you.
The next question is from Peter Olofsen, Kepler Cheuvreux, OXR.
Yes. Good morning, gentlemen. My first question is on the Americas, where you gross profit growth and gross margin was pretty strong. You mentioned a couple of factors, including product mix. To what extent is this the typical 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 have been helping your overall mix? A question on working capital. Overall, for the first quarter, in terms of number of days, it's pretty stable versus Q1 last year. Looking specifically at inventories and receivables, if you see 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 build-up of inventories. Thank you.
Yeah. Peter, 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 E.T. Horn into our global Americas organization, so some more visibility that helps us. Also, a small change in also relative to E.T. Horn, in the way we account. It's of various factors, but I think we are positive about the direction of the margin. 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 IMCD has been very strict. We pay in time to our suppliers, and we also expect payment in time 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 you a view?
Yeah. basically, it's not that it has dramatically weakened inventory turnover or DSO in recent weeks?
No. Peter, Hans here. No, we talk about exactly the same days when you translate it in days of revenue.
Just going back on your answer on the Americas. Product mix, it's still not fully clear whether this is just the normal volatility or fluctuations which you have from quarter to quarter, or whether there is a structural element to that improved product mix. Is there a meaningful contribution from new products that have been added to the portfolio or new distribution rights that you have secured?
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. Again, it's also part focus of the organization. It's a bit early to say. Let's see what the next quarters will bring. Certainly, if situation comes back to normal, we probably will see maybe a slight reduction, but we will see.
Okay. My final question on Asia Pacific, which seems to have had quite a robust organic growth in this first quarter. Were there particular countries or end markets that drove that growth?
Peter, Hans here. I think it's fair to say that, as Piet indicated before, we have, of course, a bit of a China impact in that region, but China is pretty small. That had a very weak first quarter. Other than that, most of the companies performed positive.
The growth was well and robust.
Yeah.
Okay. Thank you.
The next question is from Mutlu Gundogan, ABN AMRO. Go ahead, sir.
Yes. Good morning, Piet. Good morning, Hans, and thank you for bringing the results forward. A few questions which I'd like to ask one by one. 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 first quarter?
No.
I don't think so.
No.
You're laughing.
No.
Before you know, we start talking about weeks.
No.
Working days and things like that.
I already hate to talk about quarters here. Quite frankly, I wouldn't even know at this moment. I have to look into that. If you want to, let's say, infer that it has suddenly spiked, then I can say no, in this quarter.
Okay. That was getting at.
Yeah.
The million-dollar question in Q2. You don't want to talk about current trading, and you see pluses and minuses within your wide range of activities. The net effect, I assume that is negative. 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, then the negative effects, how do you say, are stronger than the positive ones.
Yeah. Okay. Thank you. As you said a few times, and I fully agree, no one knows what's going to happen. Maybe it's an idea to talk about scenarios. Do you have various scenarios in place and your response to, let's say, a significant downturn in the economy? If we look back at 2008, 2009, I know that you were able to offset a large part of your organic gross profit decline. How are you looking at? Obviously, your business mix has changed. You're now in the Americas. 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 the prudence in recruitment. We won't do that unless absolute 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. I think we all experience that if you 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. It's of course clear that if the economy stays closed for another year, then all of us are in a totally new situation.
If this is a temporary thing, then I'm pretty confident that we will get through this in good shape. 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. A final question on those scenarios. What kind of organic gross profit growth can you take, so to say? Can you offset with lower cost before you start to see an organic EBITDA 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 third-party cost, as we outsource most, are variable cost for us. What will happen to the cost structure? What we said before, we are not in the mood to fire people or to scale down organizations. For sure, there is some flexibility in there, thinking, for instance, about bonus cost, travel, PR, exhibitions, and so on and so forth. What we said before, we can take quite an enormous hit before we run into real difficulty there.
Yeah. Okay. Thanks, guys.
The next question is from Mr. Steven Golden , Deutsche Bank. Go ahead, sir.
Hi there. Thanks for taking my question. Just three questions from me. Firstly, can you tell us what underlying volume growth was, roughly? If 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?
Yeah. Let's say we look at it. No, I would even say we don't look at it, because if we look, for example, in our general chemical departments, which are a bit more volume type of products, then we see, of course, there more a decline than elsewhere in pharma or in much less volume. It doesn't say us a lot, to be honest.
Right.
I wouldn't look at that as an indicator for our business.
Second question would be, obviously the conversion margins were pretty flattish year-over-year. Given that the gross profit growth was largely margin-driven, 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 freight rate, for example, or anything else? I'm just wondering, why we didn't see more of an impact at the conversion margin level?
No, I think that 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 impacts 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 types of things. Then there are the usual swings if you look at third-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&L lines. I think the good news here is that if you look at the EBITDA margin, which is internally a more important indicator than conversion ratio, you see improvement on the EBITDA percentage, in percentage of revenue.
Okay. Sure. Sorry, just to clarify. On those third-party customers, you're saying it 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. We have a lot of customers, full transparency about our transportation costs as part of the cost price. In some cases, we also leave it to customers if they want to decide to pick it up themselves or if we deliver to them. Of course, 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. You see just changes in where it ends up in our P&L lines. 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, added value is the margin after transportation cost. There we see an improvement in Q1 versus last year.
That is reflected in the outside world in operating EBITDA margin improving compared to last year.
Right. Okay. That's helpful. This last question from me. You said at the start of the call that you had no intention to use government wage support schemes. 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 business later on after the crisis? Can you just give us a bit more color there?
Yeah. It's a good question. I think first of all, of course, we don't need it. Secondly, I think that as long as you are able to keep your own pants up, then you should do that as a matter of, for me 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, then we have to look at that again. I think that if we get into these problems, then I think many, almost everybody else as well. 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.
I think that's an important principle, because that's why we are private companies. Yes, that will also, of course, enable us to do what we intend to do with our business dividends and what have you.
I 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? 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? Thank you.
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 prudent distance or in shifts. It's of course true that, let's say the things that we do in these labs is also customer seminars and et cetera, have not taken place. What we have increased is webinars, formulation gatherings, digital, et cetera. 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. Yes, we continue to look for opportunities, but it has not been done with something very specific in mind.
No, it was creating more flexibility in the balance sheet, making use of lower interest options to reduce the interest margins that we pay to the banks. We like to have a bit of flexibility there.
While I've got the chance, can I just squeeze one 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.
Israel.
Israel, since a couple of months. We are not active in the Gulf region. That's why we opened this. We get a lot of requests also from our suppliers. We have started in pharma, now in the region, both in Egypt and the Gulf. We will expand that also to other segments. It's a small footprint. We're growing.
Very. Best of luck, guys. Hopefully see you soon.
Next question is from Quirijn Mulder, ING. Go ahead, sir.
Good morning, everyone. On street. Maybe a question on the gross margin and EBITDA. In EMEA, I calculate gross margin multiply EUR 5 million, EBITDA only by EUR 1 million. Probably that is related to Dubai, but I think it's completely the full reason if I take also into account that your integration of Velox started, let me say, last year, and it is probably not finished. 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 not followed by the EBITDA margin.
In absolute numbers, yeah. I tried to say that in more general terms on one of the previous questions. Because then your next question could be, how is it then possible that your operating EBIT margin in percentage of revenue goes up? You then also need to look at the lines in between and this third party cost, wages, salaries, provisions for doubtful debts and so on and so forth, other operating income. 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 Velox. At the same time, we added a few acquisitions. We added staff during the year, last year. We took full bonus provisions on other things.
There were some changes between how we present things on gross margin and on a third-party cost, just due to operational changes as a result of the integration of the Velox activities. That all played a role on how the numbers in Q1 came out.
Okay. With regard to the Far East, is it correct to assume that your organic growth was about 50% in the first quarter?
Yeah, we don't give a split in the quarters in the regions between organic and M&A. We have in the M&A side in Q1 in Asia-Pacific is, for sure the Whawon acquisition, a pharma business that did pretty well in the first quarter. We had some activities in India and Singapore that were for the first time in the numbers. I don't know out of the top of my head, Quirijn, the split between organic and acquisitions, but we have a substantial organic growth as well in this region.
Okay. Okay, that's all my questions for now.
The next question is from Edward Tenney, One Invest. Go ahead, sir.
I want to jump in with you on my side if possible. I apologize if I missed the opening presentation comment. Sounds a bit late getting in. Could you just talk about 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 exiting the quarter? I know you don't like to give detailed detail, but some sort of momentum would be useful to know. Thanks.
It's obvious, of course, that, let's say, during the quarter, there were changes. 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. I think in March, we saw everywhere or in many places, in Europe, first 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 a very, very good result also in Italy. 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 U.S., later in the month also, the COVID crisis having an effect. Closure of businesses. I think, let's say the fuller implications will be felt in the next one or two months. Yeah. Differences, of course, as I said, also in the introduction, all the more industrial businesses and the more life sciences businesses, which showed very good activities.
Okay. Just going back to your point earlier, you were talking about on a question, scenario planning. Assuming, I'm just making this up, you have scenarios one to five of level of intensity. Are you staying within the parameters of the early scenarios, i.e., less drastic? Looking at the numbers so far would 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 divergences, plus or minus within that scenario?
No, I think that we will stay within, let's say, the scenarios that you indicate. I think that even in a more drastic situation, we will continue in the way we do.
Okay. Then just a final question. 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?
Well, the performance is still very satisfactory. I think we all saw that some of the manufacturers have closed in certain countries, I think in particular in the makeup industry. Secondly, that has to do with demands, and China is an important market also for products that are produced elsewhere, in particular also in Europe. That market also decreased. That is also an effect that you will see. That is what happened. Notwithstanding that, we still had, let's say, good results in that segment. It's a segment that is, let's say, a bit more vulnerable for demands and also this particular crisis than the other life science segments.
Just on that life science, did you have the ability to scale up as the demand rose?
Yes.
Okay, no bottleneck issues there at all.
No.
Okay, 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 the upside and positives as a positive note.
Yeah. What I don't want to do is now trying to split the quarter in months. We were doing okay, and the whole quarter has been okay. Let's keep it with that.
Okay. Right. Thank you very much indeed.
The next question is from Hakan Eliana, APG AM. Go ahead, ma'am.
Yes. Hi. Good morning. Thanks for taking the question. Can you hear me?
Yes, I can.
Super. Yes, most of my questions have been answered, but I have just two left. The first one is, 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 first three or four weeks of April, please. That would be my first 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 we reported at year-end. Your next question is what happened in the first two weeks of-
No. Well, basically what you're talking about then, you have a EUR 100 million cash position at the end of the first quarter, and what is the utilization of the revolver at the end of the first quarter? If that changed a lot during the first three weeks of April.
No, there were no major changes there. I think that is reflected in the number of working capital days and the leverage levels that we disclosed.
What was the RCF utilization, please?
Yeah. 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 reported there an undrawn position of around about EUR 200 million. We added EUR 100 million, and then I think it's easy to do the math.
Okay. In that same line, now that the economic environment has turned a lot more uncertain, have you considered substituting your reliance on RCF for some more long-term debt?
Sorry, I missed your question there, to be honest.
Yeah, no.
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 shorter and it's the standard debts that you have in the market. The only flexibility that you then have is on the RCF.
Yep. Well, basically, that's the question, if you have considered to substitute RCF for another bond potential.
There is no need to make the change at the moment.
Yeah. My last question would be on M&A. I know it's part of your strategy. Is there a project that we can have in mind this year, a transaction where due diligence is already in a late stage?
Yeah. Well, I don't want to give specifics on that, but 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. Some of them will be postponed, some of them we will continue.
Okay, thank you. Those were all my questions.
Ladies and gentlemen, for any additional questions or remarks, you can still press star one. Star one for any additional questions or remarks. Go ahead, please. There is an additional question coming up from Quirijn Mulder, ING. Go ahead, sir.
Yeah. Guys, on last year, first quarter was quite strong related to, in my view, the Brexit, for example, as that was originally planned for the 29th of March. Let me say, you had an idea about there was some stock building then. This time it looks like that you are not so certain about stock building. It has probably to do with your policy to be very carefully operating with regard to certain clients. Can you give me an indication about the whole story with regard to the stock building?
It's very difficult. 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 unwillingness, but it's just impossible to do that. This is all across the world in all kinds of different market segments. We can't see that. In countries like, you refer now to the U.K., that's one country with a very specific set of circumstances. We had a bit of a more of a feeling. 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, that is a little bit our deduction, but it is not something that we can verify.
Okay. This is a deduction and not, let me say, there's not a real proof of that stock building then.
No.
Okay. No, thank you for clarifying that.
Yeah.
For any additional questions or remarks, you can still press star one. Gentlemen, there are no further questions at this moment. Please proceed.
Thank you. I wish you. Oh, yeah. Sorry. I have to close. Thank you all very much. I hope you stay healthy, and we speak to you next time. Enjoy the summer. Bye.
This concludes the IMCD event call. Thank you for attending. You may disconnect your line now.