Earnings Call: Q3 2020

Nov 10, 2020

Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Interpol's Third Quarter and Nine Months twenty twenty Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Luca Mirabelli, Head of Investor Relations of Interpump. Please go ahead, sir. Thank you, and thanks to everyone for your patience and for dedicating your time and attention to our results today. I'm here once again with Executive Board Member, Pablo Marazzi and our CFO, Carlo Banshi, and we will do our best to illustrate the results and answer any questions you might have about them. Today, it is almost exactly eight months since COVID-nineteen was declared pandemic. Thanks to the quick and efficient reaction of our subsidiaries at all levels during this time, I am pleased to say that Q3 twenty twenty was a quarter of confirmation of all indications we gave during the development of the crisis. Our sales in the quarter were still down compared to one year ago, but only slightly minus 2.5 at 314,700,000.0. As expected, this represented a sharp improvement compared to the minus 18% registered in the previous quarter. The organic performance of minus 10.8% was almost exactly compensated for by a plus 11.1% perimeter expansion. Therefore, the reported result of minus 2.5% can be entirely linked on the currency headwind of minus 2.8 Besides this overall satisfactory result, I'm also pleased to report a slow but steady monthly improvement of the year on year comparison. Looking at these results by division, we note that the strongest factor this quarter was hydraulics, and this is new for the year, but not totally unexpected as a stronger rebound for hydraulics was somehow in the air, given the sizable compression of sales seen in Q2. Reported sales in Hydraulics were up 4.1 compared to Q3 'nineteen. Let's see the split. The organic decrease was a single digit at minus 9.5% with an additional minus 2.8% from the currency exchange. The perimeter expansion was worth plus 16.4%, and therefore, responding to the contribution from Reggiano Iduori and Transfecto, which, as you see, was even stronger than in the previous quarters. Overjetting, which has been running at a faster pace so far, apparently felt more fatigued in the quarter. The organic performance was minus 13.1%, the FX, again, 2.8, the perimeter expansion plus 1.5%. Putting everything together, we get to a quarterly reported year on year decrease of 14.4%. However, it is worth remembering that the comparison base for 2019 was particularly challenging, and it included, among else, an unusually large order delivered by Amelmann in the month of July. Result from the quarterly to the year to date figures, water jetting is still demonstrating more resilient at minus 10.2% organic, minus 10.3% reported, while Hydraulics is down 19.3%, nearly twice as much organically and down 5.3% after accounting for FX and acquisition. Sales in the quarter were characterized by very different performances in different areas of the world. Let's take a quick look around. Sales in Europe were down 10% in the quarter, of which Italy was minus 14%. North America was down 21%, so twice as bad compared to Europe, although to be honest, some 5% is due to the currency exchange. Asia Pacific is a bit of a mixed bag. China is registering sales that are 46% above the corresponding quarter of last year. Australia and South Korea are also positive, respectively, plus 8% and plus 6%. The rest of the countries in the area are probably negative but almost irrelevant. What really drives the sales figure for the area to negative territory is the lack of the Hammer Man order we mentioned above that was delivered last year in Singapore. In the rest of the world area, the only noteworthy data is that India is finally up 13% compared to one year ago. In terms of sales by application sector, we are finding a lot of sectors and customers waking up after a long sleeve. The most likely one in the quarter was construction equipment, which reached a level almost flat compared to the previous year. Other significant applications in hydraulics were still down, but up to up just a single digit, earth moving minus 8%, agriculture minus 7%, lifting minus 6%. Trucks, despite significant improvement from the previous quarter, are still trading at minus 16%. The cluster of applications that was growing the most throughout the first two quarters, made up, as you remember, by oil and gas, marine and offshore, is significantly down this quarter due to the unusual comparison base that is the same, again, a large Amazon order, but it is still positive year to date. Among the sectors that are typically covered by our water testing division, the only positive one is cleaning, registering at plus 3%. While we are, of course, pleased about most of the trends, I would like to remind you that the situation is developing very rapidly and that the comparative strength of areas and applications can change and does change at any time. And this is not necessarily bad news for Insofar. As you know, one of our points of strength is precisely the ability to refocus our activity quicker than most of our competitors can do. And I believe our quarterly results once again reflect this. Turning the page to profitability. As you know very well, this is the area where IntraPalm stands out the most. We closed the quarter with $76,000,000 in EBITDA with a margin on sales of 24.2%. This is the same record high figure of Q3 twenty nineteen despite the organic decrease in sales, despite the better performance of Hydraulics compared to Warner Jetty and despite the dilution brought about by acquisition. So it is fair to say it represents one of our best performances ever. Going by division, margin for water jetting was 29.2%, only 80 bps lower than last year's record 30%. Margin for hydraulics was 21.7%, 80 bps higher despite a 20 bps dilution due to acquisitions, which means that it would have been 100 bps higher as a change to perimeter. Year to date, in the nine months, this translates to 26.5 margin for Voca Chepi, 110 bps lower than last year and 20.6% for Igloox, only 60 bps lower than last year, totaling a very satisfying 22.6% in the margin for the first nine months at a consolidated level. So in absolute terms, this means that EBITDA at the September stood at two and fifteen point three million. On a side note, the contribution from the welfare systems to have labor costs and plans that were not operational due to COVID related being such, like, for example, Cafe de Graciola in Italy, accounted to 0.7% on sales in Q3, much lower as expected than the 2.3% seen in Q2. And hopefully, this figure will taper off as we go on with the next quarters. Net income for the quarter came to EUR 39,500,000.0, bringing the year to date total to EUR 103,000,000 with a tax rate of 26.7% so far. Last but certainly not least, cash flow was very healthy also this quarter. Let's look at the most important items. Cash flow from operations was EUR 65,200,000.0, EUR 40,000,000 above last year. This growth might appear a bit confusing, but you should consider that June 2019 ended with a Sunday, and so a significant Italian tax deadline last year was extended to July 1, so it fell in the first quarter, while this year, it regularly fell in the second quarter. To get rid of this swinging and confusing seasonality, it is perhaps more meaningful to consider the year to date figure, which is down exactly 7% compared to the first nine months of last year, perfectly in line with sales. CapEx in the quarter amounted to EUR 16,200,000.0, accelerating from the previous quarter, bringing the year to date total to EUR 45,700,000.0. Sales net working capital kept decreasing, freeing up a further EUR 9,700,000.0. Nonfreight working capital absorbed 4,300,000.0, mainly due to the different dynamics and timings in tax credits and the employees leave accruals, but it is worth reminding that changes in this line item, because of their nature, tend to self compensate over the years. Unsurprisingly, as a result of all this, free cash flow was very strong at EUR 50,300,000.0 in the quarter, bringing the total year to date to EUR 148,600,000.0. At this point, there is very little doubt that this year's cash generation will make history. The expense for acquisition for the quarter was €9,300,000 Additionally, 10,900,000.0 were spent in treasury shares. The overall improvement in net financial position amounts to €33,400,000 bringing our net debt as of September 30 to €310,700,000 At the same day, the additional commitments for purchase of subsidiaries were worth €58,000,000 Let me now go back to my initial remarks about Q3 being a quarter of confirmations. We said that the situation would improve and improve. We had a 6.5% growth of sales in Q3 over Q2, which compares to an average minus 10% seasonal decrease, which is almost regularly seen in a year. Since the trough seen in April, consolidated sales improved the month after month. Not only sales, but also order intake has picked up month after month, slowly but steadily. We said we did not expect a significant deterioration in margins. Margins held better than anyone could have hoped for, in fact, as they increased. We anticipated a very strong cash generation for the year, and it just happened, almost twice as strong as last year. We understood, but we did not agree with the worries expressed by some investors financing throughout the crisis, and I believe those worries are now down. Everything we said in the past, though, was not based on our capacity to predict to the future, but rather it was based on our familiarity with the Inter France business model, our confidence in its resilience and adaptability and also based on the differences we immediately noticed and highlighted between this and the other major crisis that we experienced, the one of 02/2009. These will be key factors to keep in mind in the upcoming quarter too. The world COVID-nineteen situation is taking quick turns just like the roller coaster as contagious surge in most areas. We also hear positive news about vaccine effectiveness and also about the election of a US president that seems to care about the matter. For the time being, all the precautions and lockdowns that were imposed for the current wave of contagion have not had any impact on highly automated industrial plants, which represent the bulk of our activity, and by now, have proven to be a very low risk environment. Therefore, given the unpredictability of the situation, I can only reiterate my indication that the recovery will be there, the recovery is there. We just don't know a lot about the timing and shape. But remember, today, you are listening to a company that has consistently delivered the best possible results across all the different phases we have gone through, and there is no reason to believe that anything different might happen in the future. As you noticed from yesterday's press release, M and A is still going on. While waiting for some larger deals to mature, we keep speaking the low hanging fruit represented by smaller companies with a clear and easy integration path. This data transition announced YESBIRE is a good example, and its product range complements in a very nice way the reduction gears offered by TransTechno. At this point, I would like to thank you for your patience and for listening so far. And the line now goes to the operator for the Q and A session. Thank you. Thank you, sir. Excuse me, this is the Chorus Call conference operator. We will now begin the question and answer session. The first question comes from Domenico Gievoski of Equita. Please go ahead, sir. Good afternoon. A couple of questions. The first is an indication. So if you can elaborate a little bit more on the REGAN and PROSPECTNA contribution, if you have any kind of comparison because they sounded very, very stronger and higher than my expectation. So I'm wondering if they are performing better than the rest of the group. And if this is the case, why? And also in terms of profitability, what is the level of profitability they can they have achieved? This is the first question. While the second question, I'm trying to understand if you are seeing an improvement quarter on quarter also for Q4 so far. I understood that COVID is not an issue so far, but I'm trying to understand if there is an underlying demand that is improving for the two divisions. Okay. I'm Fabio Morales, and I will take the answer, and then I will leave to Luca for some further comments. Regiana and Prospectno are, so far this year, performing very, very well, very, very well considering what's happening into the market in general for the COVID situation. But in particular, TransTechno is performing very, very well also on absolute terms. TransTechno is up in terms of sales in comparison with the same period of last year at the September, then in the first nine months, while Regina is slightly down. Transtech is up 7%, and Reggiana is down in line with our hydraulics division or maybe even slightly better. In terms of profitability, both companies, both Rejar, Victoria and TransTech are performing very well and are on a consolidated level above 20% EBITDA margin. When we acquired the two companies, they were slightly below. And today, despite the very difficult market situation, they have overpassed the threshold that is satisfactory for us. We still believe that there are rooms for further improvement in margins because we have only taken the easy action, the line being prudent in terms of rationalization of the commercial structure around the world. For example, we have merged the subsidiary, the majority of Victoria in Brazil with, in fact, hydrox to Brazil in order to achieve cost synergies and better opportunities also in terms of sales. We have integrated the subsidiary that Transpactno had in Florida in The United States that was very small, just a couple of million dollars, with the very strong and important subsidiary that the regulatory has in The United States that is very well managed with more than $30,000,000 sales and a good profitability. And we have integrated the TransTecho business and TransTecho distribution in the North American market in a regenerative territory in order to have a stronger presence, network and a suitable organization and inventory in the American market. But these are just the first examples, and we really believe that we have a further potential of improving the profitability, thanks to the reorganization or some normalization action that we can take and we can implement. Also, development is expected quite positive because the order intake is very good on both companies. We have an order backlog that, in particular, in Transtech, is well above in comparison with the same period of last year. Energia is the level of last year, but is improving in this amount. And then we have a good expectation for the last quarter, but more important on a midterm perspective. And to answer your second question, Domenico, let's say that from what we can see of Q4 so far, all the good trends went on in the month of October. This is, of course, I can't be much more precise in this, but I'm absolutely pleased by the trend in October, and I didn't see any sign of a U-turn coming out. Just to complete a follow-up on the TransTech node. So what is the reason? So I understand the profitability that you are already, say, integrating, so taking some opportunities. But on the top line, what is driving top line in such a tough year so that you are able to grow the top line? Was something related to cross sellings or to the synergies or something that was already in TransTech now? It's something that was already in TransTech now and it is mainly explained by China. Are aware that TransTech now has a strong presence in China, both in terms of manufacturing activities. We have an important manufacturing plant with almost 200 people in China for Transtechmo. And we realize in China products for Europe or for exporting in general, but also for internal market. Then the internal market in China for TransTechno China is performing very well, TransTechno is succeeding in having better penetration also on Italian and European customers. And then so far, we have just started discussing the potential cross selling opportunities within the group with Mariote Piccini, within Oddspar, in particular with the companies that are part of the Q and A division. But so far, we have not achieved any significant benefit in terms of cross selling for sales. And then it's sort of stand alone performance in terms of sales development. Okay. Thank you. Thank you. The next question is from Alessandro Torcola of Mediobanca. Please go ahead, sir. Yes. Good afternoon to everybody. I have three questions from me. The first one is, given that we have discussed before order intake or the backlog. Can you give us an idea of what is happening in terms of order intake trend for the projecting that you mentioned before that due to the COVID lockdown, order collection was basically a little bit impact in the previous quarter. So can you give us an idea if order collection recovered in this specific segment? And at least if you think about Ameren and maybe if there are any specific kind of differences in terms of order intake trend for these companies? This is the first question, and then maybe I will add tomorrow for me. Okay. Well, as you know, we do not comment on specific numbers for order intake for single companies for single periods. But of course, maybe we can have some general comments to make. Are you aware of any significant difference between to order intake in the two? My impression is that on a long term, so year to date, the behavior is quite similar. Although, of course, it has a different different behavior to the prices. So the order intake, flight sales for water testing, let's say, was decreased in a less significant way during the start of months, so during April and and May. Whereas for many of our companies in hydraulics, the order intake was almost suspended and went down to almost zero. I'm thinking, for example, to the India company for hydraulics. So there's no doubt that during the crisis, hydraulics took a stronger hit also in terms of order intake. But exactly as it happened with sales, they also had a quicker pickup. I'm not in a position to add any comments about specific companies in either of the sectors. No. The only comment that I would like to make is about the different trends that Luca just mentioned, and it is also explained or related with the different time to market for the two division because you have to imagine that, generally speaking, of course, there are differences between the different companies of the two division. But generally speaking, Hydraulics is really focused on components, say, component manufacturing and sales. And then when the lockdown stopped the manufacturing activity, we had a significant and immediate an immediate consequence. In the auto objective division, we have had some sort of delay because part of the auto objective division is, in some way, related to projects or to more complicated or bigger client execution or project deliveries. For example, we have some cases in Oxbard or in Amelman or even in some case, maybe in that's even we have part of the business that is more related to more complicated the project that it was probably not immediately stopped during the COVID. And then we this is the reason why we had a better performance in that period. And now we are probably suffering a little bit more in this divisions because of the time that we have been stopped for discussing new projects or for developing together with some customer this project at the time of COVID. Of course, this is just a postponement. And today, activity is almost back to normal, and then we will see improvement. But the level of the cyclicality or the level of time to market in particular, not the cyclicality is different in the two sectors. Okay. The second question is in The U. S. You said before, not in the pre performing so well, okay, so far. Can you give us an idea of what is happening there? If, for instance, maybe also the election in The U. S. Affected a bit, as you mentioned before, I don't know, any postponement of some orders. But just to have an idea because across the two individual, the media say share the weakness of K and D in this area. Okay. Well, I wish we knew exactly the answer to this question. Of course, it makes sense to think that there might be some postponement of orders due to the uncertainty of the elections. At least this is something we didn't see four years ago. So there are good reasons to think that this might be going on also this time, but only time will tell, only when hopefully there is the end of the complex procedure that we are witnessing in these days, we will see if the order situation and the activity of the factors we cover will review and how much. Generally speaking, I think that this is just an indication that The U. S. Economy was doing great in terms of stock market, in terms of technologies, but not exactly in terms of everyday industry. This is our perception. However, there is not a lot we can do about it. As you know, I understand that we are all we are all obsessed with order intake and organic growth. But as a matter of fact, that's the only thing that we cannot control entirely. Of course, we can listen to it, we can keep our ears and antennas on and make sure that we don't miss any opportunity, but we're not in control of how how many opportunities we are presented with. So all we can do is make sure that our our company, the whole level, we act in the most flexible way to whatever situation they're presented with. Okay. And the last question is just a clarification on the impact on, let's say, one off action related to the employee of scheme. Can you tell me exactly what is the impact that you had, the positive impact, let's say, you had in nine months or in actual term or as a percentage of sales for the reduction? Thanks. I'm sorry. There might be an obvious problem or a problem with my brain, but I didn't understand your question. Could you please repeat it? Okay. It's related to the advantage, okay, you got some margin related to the customer reaction in Italy and the similar scheme, okay, internally, we could get in nine months, okay, Let's say, know, beyond the full impact so far. Okay? Okay. Let me set the number for you. It was 0.7% in the quarter. It was 2.3% in the previous quarter, of course, the emergency quarter, and it's currently around 1% year to date. On this is going to taper off. It's not going to disappear because, of course, it can only disappear when we are having summer, let's say, beautiful, predictable and regular growth going on. This is not the kind of scenario that we are expecting for the next quarter. So it will not go down to zero completely, but it will certainly stay at, let's say, marginal levels. In I don't know if in in the history, it goes usually from zero to zero point four point five depending on how good the the situation is and what happens during the during the year. Remember that, for non Italians, this might be useful to to remember. Cafe de Gracione is not the only emergency tool, welfare tool. It's actually a standard structural part of the Italian welfare of the Italian labor market. Now you could see that as the the the other side of the coin, when you think of the proverbial rigidity and the expansiveness of the Italian labor market. But it also provides you for some flexibility to face bad moments. So this is never going to disappear. It will simply be deflated to, let's say, ordinary levels, and there are levels that are have never demanded a comment in the past and will probably not be worth a comment in the future. I don't expect this to go down to zero probably until well within the 2021. Okay. Thanks. Very clear. Thank you. The next question is from Mateo Bonisani of Kepler. Please go ahead, sir. Yes. Good afternoon. I have three questions. First one is, can you remind us if Hanalmann has a difficult comparison also for the third quarter of this year? The second question is, according to your feeling, how much of the recovery which you are experiencing in particular in drawings in order intake due to a stocking, so you may be going to appear going forward and how much is instead a more general recovery in your intake? And the second last question is, if you exclude the debt of the Rimetela, which should account roughly speaking million dollars of EBITDA, do you expect 2021 to return further to the same level of EBITDA of 2019? Thanks. Okay. You said 02/2018. I will I'm going to ask to the people at the table about the q four for Hanwha last year, whether it was a particularly challenging, particularly good quarter or not. I'm sorry. I don't remember this off the top of my mind. The q four last year seems like, I don't know, primary school age to me. So many things happened. It's yeah. It's registered. I can see it registered at plus 18% year on year in the last quarter last year. So it was definitely a strong quarter. But it didn't have the granularity, the biggest quarter, which is missing. So hopefully, the business that was gained in Q4 last year by 101 is not exactly the same situation as what we've seen this quarter. Anyway, yes, it was certainly another very strong quarter. As to your second question, restocking is not something that we can measure. We don't have a restocking meter for our sales. But I do remember that the same question was asked about the recovery in China after the lockdown. And we all know how it went. As of today, we have a plus 46% over a quarter that was not particularly weak last year. So definitely, restocking, if it was there, had absolutely no importance, and it didn't play any significant part. It should be remember that most of our OEM customers who work with very little stocks, they use just in time or Kanban or other very, very quick delivery options. Only a minor part of our business goes through dealers. It is accurate to expect that it is safe to expect that dealers might have exhausted their inventories during the crisis. But on the other hand, some of them were closed. So again, even when limiting ourselves to dealers, I would not expect a significant part of this pickup to be related to restocking. Any volatility that we are going to see might be connected to future developments in the COVID contagion, but not in any major way to a restocking, destocking mechanism. And your third question was our expectations for EBITDA in 2021. Well, clearly, it's easier for us to comment about margins in EBITDA rather than absolute levels because absolute levels will depend a lot from the curve of the recovery and the timing of the recovery. Now I have to say that almost invariably since month of May, all the news that we have heard about the recovery were marginally better than the previous one. I'm referring to anything from the Italian drop of GDP to the timing of the vaccines to the other practical details about the fears of other interruptions to industrial productions that have vanished so far for now. So I'm quite optimistic, but certainly, I'm not in a position of giving you an indication, absolute indication for EBITDA margin in 2021, unless Pablo has anything to correct me. It is, of course, to all the comment. We are expecting the budget is on in these days, and then we will be discussing the budget for every single company in the next four to five weeks four weeks, let's say. And then it's too early to say, but we do not expect any major changes. We have been able to maintain our very, very strong and satisfactory performance in terms of profitability and EBITDA. We have all the uncertainty and all the problem related to the pandemic, COVID, the collapse of the oil price of this year, and then we do not see big uncertainty or big problems related to maintaining at least the profitability margins for next year. But it's too early to say. Okay. Thank you. The next question is a follow-up from Domenico Grondosi of Equita. Please go ahead. Yes. I have a follow-up question on the profitability in the water jetting division. I understand that I'm quite surprised to see, well, starting from a record high level, there is lower contribution from almond and there is a lower organic sales and the decline is very, very small and is still basically very close to record level. So what's the magic behind? Because it's really surprising to see this level of profitability. Well, I'm afraid it's a very simple magic, and I'm sure that if you look at the numbers, you will notice that the key is the geographical distribution. U. S. Was very weak. And I think it's no secret. And of course, it's no secret from now on from this set of numbers on that EBITDA margins for energy are among the weakest in the water jetting sector. So this is an internal rebalancing of weight between contributors. Hamelmann did lose some business, but Energy lost much more. And so the comparative weight was tilted towards the higher margin companies anyway. And the second question is more strategic. So clearly, you are still missing a relevant exposure to China, still below your some of the competitors. Is it something that you can fix with M and A? So TransTech now is a good example and now is delivering higher growth thanks to geographical exposure. Are you looking for this kind of and do you have in pipeline this kind of M and A opportunities to try to increase the weight of China? Emmanuel, this is a never ending discussion about the exposure to the emerging countries. In some times, we are questioned because of the very low exposure. In some other time, you are a little bit exposed. And this year, of course, China is performing far better than other markets or other region. And then it would have been better to have a more significant exposure. But generally speaking, I believe that we are quite satisfied about our organization and our diversification in many different aspects, for which diversification in terms of geographical exposure is one of them. Then I would say that we have very balanced exposure to the different market trends, to the different regions in the world. And we are not looking for significant or meaningful adjustments in terms of our exposure in this sense. Course, if whenever an interesting acquisition we have, then we will be ready to follow it with an opportunistic approach. But we are not looking for major acquisition in China or in other particular region in the world in order to rebalance our presence and our exposure. Of course, we are very, very happy about the development of Intrasechno, thanks in particular to the presence of the company in China, but after a very, very difficult first quarter because you remember very well that China was the first to be completely blocked by lockdown. We recovered very, very well, and now we are performing in a really impressive way, supporting the growth of the whole TransTech Group and having a very positive development expectation. We don't see strategic reason to rebalance our presence as a group. And again, if I may add a reminder to those who are maybe less familiar with the company, we have been we have proven numerous times in the past in both China and India that we are able to scale up our activity in a very quick way. In both countries, we nearly doubled our production in a little more than one year. So clearly, we are not going to let any opportunity be wasted because we lack the organizational life we lack the operational presence. This is not something that we are very afraid of. Great. Thank you. The next question is a follow-up from Mr. Marcelo Bonestani of Kepler. Please go ahead. Yes. Just one question. 2020, we clearly felt by the significant contribution of Regina and Trastec now in terms of Delta Perimeter. Looking to 2021, we know that you are not used to comment specifically on your M and A pipeline. But my question is just to have a flavor. Could 2021 be a year with significant contribution from acquisition? Or do you see more likely the more insight this? Of course, it will depend on the M and A opportunities that we will be able to do in the next few months. You never know. You we have always said we have always said that we have a significant number of the CA on the table every day or in any in any given time. But the execution and the realization of this opportunity is something that we cannot absolutely predict with some sort of with some sort of reason. We believe that we will be able, despite all the programs in terms of logistics and in terms of negotiating an agreement related to the COVID pandemic and the effect also on the results of the company, we believe that in any case, will be able to go ahead with our M and A strategy and the increase to reinvest in external growth and to invest in acquisition, the vast majority of our cash flow. And acquisition of Digital Transnationality is, of course, a small acquisition is representing our commitment and our execution ability despite of the problems that are related to this period. But we cannot predict now which will be the contribution of acquisition to 2021 results, of course. I think it's safe to say that we all know that we can count on a significant firepower, though. So again, we are not going to let any opportunity go away because of lack of means. Okay. Thank you. Thank you. The next question is from Michele Bardelli of Exane BNP Paribas. Please go ahead. Hi, good afternoon to everybody. I have a couple of questions. I'm sorry if I may repeat from my colleague, but I was not in the call at this time. The trend in October, if you can avoid a little bit in this call or even her number, if you can. And then in terms of synergies and cost of bookings for the group companies, what do you still see in 2021 that needs to come through? I mean cost synergies from the new retail companies, if that's the last time that should go through. GSI growth, is the profitability already at the regime? Or should we think about improvements? If you can elaborate a little bit on this. Okay. I'll just repeat what we said about October, which, of course, cannot be dealt with in great detail. It's not the object of a disclosure. But all the positive trends, in terms of sales and in terms of orders and order income and size of portfolio, went on in the month of October as well. This is what we have said before. In terms of the synergies, also, Fabio has sent a few words about Transfecta and Regiana. I don't know if you want to repeat it or integrate that with any other No. I believe that apart of the Regiana and the prospectus that I've already commented and then the potential opportunities in terms of cost synergies and cross selling commercial cross selling in the gearbox division or transmission division, I believe that we will have, on a midterm perspective, then two, three years, significant opportunities in realizing cross selling opportunities and projects based on application, thanks to the newly acquired companies. Newly acquired companies means, on my mind, the companies that entered our group in recent years. You have to imagine that only five years ago, we didn't have a valve oil, we didn't have a knockdown, we didn't have GSI, the transmission companies. Then we had that huge, huge developments with new fields and new components and new application. If you think about in particular, this is true for the rolling division. If you think about the period that is needed to develop a new vehicle that is usually it will last a couple of years. You can imagine how strong and how important are the potential for our companies and in particular for the companies that entered just recently our group to enter in the customer list, in the customer portfolio that is already present in the Japan Group. And we really believe and we really count on this opportunity on a midterm in order to overperform the market, whichever will be the performance of the market. And regarding your last question about GS Hydro, GS Hydro, of course, suffered this year in terms of top line. We are down single digit, mid single digit. But this this was the worst possible year for a company like Geosydro that is, in some way, related to the old price that collapsed. That is related part of the business is related to the installation and on-site job that has been postponed or delayed because of the need to together or put in place in order to prevent the COVID-nineteen pandemic. But despite the very difficult market condition and the market situation, we have been able to further improve the profitability of the company. And now, after my answer, we are confirming these very good results in terms of profitability and cash flow. And in the first nine months of the year, we have reached 13 something percent EBITDA margin, which is a significant progress, four percentage points in comparison with the same period of last year. Then we are very satisfied about the development of the company. And GSI, again, represents another opportunity for entering new customer or for bringing the the product and components that are present in in Japan group catalog them to new areas of the market to different end customers. And then we see a lot of opportunities looking at. Thanks very much. Mireberly, gentlemen, there are no more questions registered at this time. Very good. So I thank you again for your time today. Remember, we are available for meeting, unfortunately, only virtual meetings directly or through your favorite broker. And we'll speak again on the Q4 results presentation, which, as far as I'm aware, has not been set yet as of date, but we will definitely publish the calendar for the February 12, Mr. Banshi is informing me that. Anyway, you will find the date on our website, and you will definitely receive the usual invitation. So thanks again, and have an update. Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.