Earnings Call: Q3 2021

Oct 25, 2021

Good morning. This is the Chorus Call conference operator. Welcome and thank you for joining the SOGESIX 9 Months 2021 Results Conference Call. As a reminder, all participants are in a 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. Frederic Sipayi, CEO of Sugesi. Please go ahead, sir. Thank you, Adam. Good morning, ladies and gentlemen, and welcome to our 9 months 2021 earnings call. I think you all received the presentation, so we will go through it with Jan. And then at the end, of course, as you roll, we will answer it to questions. So could you please go to Page number 4, where we have the highlights of the 1st 9 months 2021? So Page 4, I think we can say that we have good results for the 1st 9 months of 2021 In regards to the current automotive market situation, clearly solid on the sales side. I can say that In all regions, we are beating the market. I will come back in detail on that later. EBITDA and EBIT Are much better, of course, than 2020, but also 'nineteen. And most important, free cash flow quality by €27,000,000 We'll come to this later, but I can say that to get this free cash flow, we have to improve The business model of all business units and implemented very strong actions in the working capital and CapEx management. I propose we go to Page number 5, please. As I was saying before, our sales are much better than the market. Cost of raw material and transportation have increased during this quarter. I will give some more information when we come to suspension. Astell is one of the commodities which increased the loss during this year. And we will explain, of course, in detail the impact in the margin of the quarter 3. Page 6, please. As you can see and as I was saying before, our model quite diversified from product and geographical From point of view, it's tailing as we are showing minus 5% of sales versus 'nineteen at constant exchange rate, With the market down by 15%. And the lipid by customer, Page 7. So we don't have the change of customer 4 year versus June presentation. You can see nevertheless big increase in BMW versus 2019, Thanks to the start of many new products that we launched in 202021. The details Page 8 per business unit. You can see that Air and Cooling and Filtration are showing great resilience, thanks to the start of new business and also aftermarket and OEMs. Suspension is basically following the market trend with minus 14% versus 'nineteen at constant exchange rates. Page 9, please. I will give more information in a few minutes after the financials of this nomination. But as you can see here, we have continued to be very dynamic from a business valuation point of view. And we will continue, of course, in the next quarter in the last quarter and next year. So now I will let Jan comment the financial slides. Thank you, Fred. So we move on to Page 10. As usual, we compare our results with 2019 versus the Precovid. You can see the first box, no big news, Fred mentioned that already. It's the impact of Minus 9% of sales versus 2019. The second box is less Positively than it was before. We already start seeing the impact the negative impact of the increase of raw materials. Although it is Thank you, Hayden, and I'll come back to that. The main takeaway of this slide, it's the following box. It's Fixed cost savings, €30,000,000 fixed cost savings versus 2019. Then you have the start up cost of Romania. And as we mentioned at the end of Q2, Strong positive one offs versus 2019. So all in all, as you can see, an EBIT which stands at 5% when it was 3.8% in 2019 before COVID. Then we move on to Slide 11. So the 9% less sales we already commented, contribution margin appears Ahead of 2019, but we'll show in the following slides that it's not exactly like this. Restructuring costs below 2019. What is important is We mentioned this in our previous call. It's the net income from discontinued operations, €24,700,000 loss, including €20,600,000 of reversal of the translation reserve Linked to the disposal of filtration Argentina, I insist on it because it's an accounting matter. It's non cash. It is just a reversal of accounting impacts since, I think, 2,004. So nothing to do with the operations. And as you can see, the net income of operating activities is still far ahead of what it was in 2019 at +22.7 versus €12.1 1,000,000 If we move to Slide 12, it shows Q3. And Q3, as it stands in the current account, as you can see, Q3 contribution margin looks Fine, at 31.7%. What we have done is that we have included in Q3, a special project, which Fred maybe will comment later, which slightly distorts the numbers. And when we take it out, Which is the column on the right hand side. You can see that contribution margin is At 28.4 percent instead of 31.7%. So we have really a strong negative impact Of the increase of raw materials, Fred mentioned this in our last call. There is a deferred impact. We are fighting to get it back from the carmakers, but it really already shows very strongly in Q3. Caustic costs, It's still the same. We are still doing our homework. And as you can see, we still have an €8,000,000 Saving OpEx cost versus 2019 in Q3. Write down high at €5,000,000 in Q3. 3. And then all in all, a result of net operating activities, which is A loss of €2,200,000 in Q3 2021. It was a profit of €3,600,000 in Q3 2019. I shall not comment too much on the following line, which is discontinued operations. It's what I referred to before in The reversal of the translation reserve of Argentina. If we move to Slide 13, Free cash flow. Funds provided by operations are slightly distorted by the inclusion of the Loss of inflation reserve. So if it was not included, it would be Slightly higher than it was in 2019. As you can see, positive free cash flow on 9 months positive by 26 €500,000 It was negative by €500,000,000 in 2019. And as you can see, we have done our whole work Both on working cap and CapEx. CapEx, this includes high investment in Romania. So we have focused investments on the necessities of SoGESI. And at the end of the day, We ended the quarter with an NFP of €267,000,000 which is in line with what it was at the end of 2019. And I'd say we have not pushed on factoring because as you can see, factoring stands at €87,000,000 It was €103,000,000 2 years ago. So we have not pushed on this. We probably might have taken more factoring. Page 14, debt profile. I'd say not much changed since our last presentation. We still have EUR 126,000,000 of cash on hand, plus EUR 140,000,000 of undrawn lines. We have started the renegotiation of the lines maturing in 20222023, And we already are working to renew a first batch of €50,000,000 appliance. Then we move to the results by BU, so Page 15. Page 15, suspension, as Fred mentioned, is 20% below 2019 in terms of sales. And also the contribution margin stands roughly in line with what it was 2 years ago. Less sales Means that we have less contribution. The contribution margin already is suffering because it could be, which She's most impacted by raw materials. So the increase of iron costs already is sitting with the EU, and it will keep on In Q4. Gross fixed costs, minus 16% versus 2019, I insist on it. It's €14,000,000 fixed cost savings. It is a big saving, but not enough in view of the reduction of sales. So we are going to focus our actions in the Coming quarters on improving operational efficiency, which will also imply reduced further reducing fixed costs. Titration is a different profile. As Fred mentioned, sales roughly in line with 2019, Minus 1.2%. And this, coupled with 14.7% Reduction of caustic costs generates a high increase of EBITDA, Which also is slightly carried with positive one offs. Air and cooling, it's much the same. As you have seen, sales are also in line with 2019, only 3.2% lower than they were in 2019, which is far better than the acquisition of the market. Gross fixed cost Minus 11.2% versus 2019. And so this generates a further improvement of profitability, which Earnings was very high in 2019 at 16.4%, up to 18.5% in 2021. Fred? Thank you very much, Jan. So I propose we move on to Slide 19, please. As I already explained before, we started the process of the product portfolio transformation in Air and Cooling and Putrefration already a few years ago. And you will see next page that it is paid in law with new business awards. So let's go to Page 20. In Page 20 here, I decided to focus only on the pipeline of orders for full EV Products or cars. Why? Because for hybrid cars, in fact, our products are for most of them already 100% compatible. And we have currently a very good portfolio of business in quotation in the pipe. And you can see in this page that 60% are for Air and cooling today, and 34% of our quotation for the Moon Group are for full EV products Or cars. So that's quite interesting for the future because one of what is very important is that This quotation will obviously transform in business awards and then will transform to turnover very quickly In 2023, 2022 or 2024, which is very different from business for ICE application. So if we go to Page 22, here we have a few examples of the business on which we have been awarded in this year during this year. And you can see that we have 2 new businesses compared to June. 1 is for premium German carmaker And another for an American, 100 percent LCD pure electrical failure. So Page 23, This is the illustration of the product for the German premium carmaker. And what is very important to understand here That impact in the products such as this 1, we have 5x more added value than an average manifold for Airline Cooling. And also the process is very important because we have been awarded in this business, thanks to a new well-being process, Very clean well-being process that we did a lot, especially for this kind of products. In Page 24, It's a reminder of our innovation for filtration with a feature HEPA, so very high protective feature. We have been awarded already in aftermarket in North countries of Europe, such Norway and Sweden. And I'm sure that in the coming Quarters years. It will become very important in the rest of Europe, too. So we are very confident about this product range. If we go now to the market outlook, Page 26, as you can see and no Yes. Yes. It's forecasting a very low quarter 4 at minus 20% versus 'nineteen. Yes. I have to be very transparent for with you. It's not a surprise for us, basically, because as you may remember, We are saying for 1 year, no, that we were prepared and preparing a very low 2020 year 21 year. So for us here, there is no surprise. Page 27, A little on a focus on steel. So as Jan mentioned, we have been impacted in quarter 3 By the steel prices and the pass through to customers. Here in this page, and inside today, we were presenting to you only 1 index. What is important to understand in SOGEPY business model is that, in fact, we are purchasing 4 types of steel, And we don't purchase raw steel. We purchase already transformed steel. And each of the steel has an index To follow the trend of the prices. And as you can see and as you all know, of course, the indexes have increased a lot In 1 year. What is very important is what I will show in the next slide. So Slide 28. Here, you have the comparison versus The market price and ore pricing. So you can see, in fact, in the curve of the SoGES prices, Which is in red, that there is a lag of 3 to 6 months between the evolution of the index, Increase or decrease? And the impact in all prices. Why? Because it's what I mentioned before. We are pushing transformed steel And not growth still. That's why in Q3, the impact is so big compared to the first quarter 2 1st quarters It's because during the 1st two quarters, we have been able, 1st, to release the increase. And second, there is the flag of 3 to 6 months Between the impact in our prices and the indexes. If we move on to Page 30, as a kind of conclusion, if I may say. There has been, unfortunately, no surprise, 5, as I was saying on the volume, we were ready and prepared for a very good 2021 year With very uncertain markets, we expect in Q4 still low volumes and unstability in volumes and purchasing price, But we have reacted very well and quickly to these market conditions. All plans have integrated various Actions in order to mitigate the market impact. So we confirm the view that we expressed during The 1st semester results means to achieve the full year EBIT margin at least equal to the one that we recorded in 2019, Which is a recurrent year for us. So we have finished with the presentation. Thank you for your attention. I propose we move on to the questions. Excuse me. This is the call for conference operator. We will now begin the question and answer session. The first question is from Monica Boncio with Intesa Sanpaolo. Please go ahead, madam. Good morning, everyone, and thanks for taking my questions. I have Three questions. The first one is on the performance. With no doubt, Surgefie outperformed the market Over the 9 months, I didn't see the slide regarding the Q3. If you can give us some highlights On the performance on just the Q3 of the year. The second question is on the If you can quantify the impact of the raw material prices increases As a delta in the Q3 and if you can give us some flavor on the last quarter of the year. In terms of EV supply, 34% of the quotations are for EV. This will transform into revenues. Just a flavor. In a, Let's say, 3, 4, 5 year time, what could be the percentage of ED sales As for Jaffee. And the very last is on Romania. When do you expect to achieve the breakeven for the Romanian plans? Thank you, Monica, for your questions. So I think your first question Was about the Q3, right, the focus on Q3 performance. We added in Page 12, in fact. So here, we have done a comparison versus the quarter 3, 2020, 2019. And as Jan was mentioning, yes, the quarter has been difficult, mainly due to the fact that we had the impact Of the steel concentrated in this quarter. So I think it was your second question. Basically, to make it clear on the Q3 increase, it's exactly the one that we were expecting and that we mentioned During the results. And at the end, the pass through that we have been able to do to the customers has been very low during the quarter Because remember, in fact, we have to wait end of the quarter in order to start the negotiations with our customers. So To give a flavor, in the Q3, we have been able to recover onethree of the increase, and this is mainly The contractual part. All the negotiation part is postponed to the quarter 4. So the specificity of quarter 4 In quarter 4, we'll recover the contractual part of Q4, one part of it, and the negotiation part for the Q3. So in the Q4, we still, let's say, expect material increase because even if the index are stabilized now, You have a kind of irrationality in the purchasing in the prices proposed by the suppliers, also due to the increase of Energies and CO2 and so on. And for now, the assumptions that we have, and I think we are pretty accurate on it, See that we will be able to recover in the Q4 half of the increase expected in the last quarter. So the impact will be less than in Q3. So I can give you this flavor. And my assumption is that we will also improve the gross 70 year suspension, thanks to the actions we launched compared to Q3 by 1% on the material and gross margin effect. No. For the EV, I think it was your question your third question. For the EV, yes, it's very dynamic. So basically, our conversion rate currently on ICE application used to be, Let's say 25%. Means if you had a quotation of €100,000,000 you were able to convert €25,000,000 On eMobility, it's difficult to say because we don't have the same story and background. Our expectation by BP, As you can see in our pipeline of orders currently, we are between the market in full EV. So the fact to whatever It will be the percentage of EV penetration in the next years in the market. We will This week, except if, of course, there's a big revolution next year that I don't see. But currently, In our projections, we are beating the market from an EV penetration point of view. And we can already see it in our sales of 2022 and 'twenty three, which is a good thing because in the EV, right now, it's very difficult to predict what's going to happen after 20 20 'twenty five, 'twenty four. But 'twenty two, 'twenty three are very soon. And we can see that we are always above the market, Especially, of course, in Marine Couling, where we started the migration 5 years ago. And it gives us a big advantage That is the customers because we have acquired a know how and a customer intimacy during these hard projects. And I have to say also the good surprise is suspension, basically, not because the products Our special for EV. Of course, it's the same product. That's because we are already let's say, we have a good position on EV platforms of our customers. So my feeling is that suspension, too, could be a could achieve a good penetration in EV products And cars and platforms. And right now, we are focusing, of course, on new customers 100 EVs in order to increase this week of EBIT. For Romania, this new plant, of course, we have to create this plant Difficult year. Last year was not the, let's say, the most easy year to create a facility in Romania. We had issues with our suppliers in order to neutralize. No, we are catching up. We are normalizing the situation From an industrialization point of view and installations point of view. And we are now focusing to make it, let's say, Profitable day after day, focusing on our material steel consumption, material rate, labor rate, CapEx and free cash flow consumption. So I would say that Usually, when you create such a big facility in a new country, it can take 2, 3 to 4 years to make it profitable, Especially in such an environment like we are facing today, where the instability is big from a supplier point of view. Steve, the COVID situation is not easy because our suppliers may be based in China and so on. So I would expect to come back to profitability As soon as it is stabilized from an initialization point of view and that the material consumption is normalized. Thank you very much. Very clear. Thank you. You're welcome, Monica. Thank you for your questions. The next question is from Martino De Ambroggi with Equitaseema. Please go ahead. Thank you. Good morning, everybody. Sorry to bother you on Roadmap, but probably I missed the figure. Or if it's not available, just a rough indication of what was the impact of raw materials in Q3? First question. It's exactly like we anticipated. It's very close to 2 digit impacts, The growth figure and then the recovery, as I said, is 1 third. Okay. So net net is probably 5,000,000, 6,000,000 Yes, you are very close to it, yes. Okay. And probably will be less in Q4, we you mentioned. If the indexes are forecasted, it will be a bit less. Now what is very difficult to estimate Is the irrationality of the prices from our suppliers, plus I think you have ordered about it, but You have the kind of crisis on the energy prices, energy availability. And currently, the suppliers are leveraging on it, saying, okay, The indexes are decreasing. But on the other hand, we have a crisis on the energy. We may have to shorten some factories during winter In order to save NOG. So this will create an inflation in the prices or at least the price will remain the same. So the fact that we have today with our customers we are with our suppliers, sorry, is To have the index effect of the decrease or the stabilization in next quarter. But it's quite difficult to predict because You have in one side an uncertainty in the index. And in the other hand, let's say, a push from the suppliers in order to contain the prices They are. But if everything remains as we forecasted, yes, in Q4, the impact should be less. And also capacity to recover from customers should be higher. Okay. Can we say, if I remember correctly from The past calls, you are able to recover through negotiations in 3, 6 months, Let's say 70%, 80% of the change in raw material? It's very close. In fact, it's not Only from negotiation. The other part of it, which is impacting the contract. So this one, even if It's a fight with the customers because they never volunteered to apply it. You've got it. And then the remaining portion is based on negotiations. It could be negotiations to compensate the increase of pricing or not give the productivity that Each year, we have productivity to give to the customers. So we do a kind of deals, and we don't give you the productivity this year, next year. And okay, we'll compensate. But your ratio is correct. The 2 together Are covering 70% to 80%. The big issue that we had in quarter 3, It's a time difference between the time you have the increase and you are able to pass through to your customers. You have a time effect. And of course, our customers are very good to play with this time, and we are shaving in order to get what we have to get. Okay. And very last on raw math always. Can we say that if the market Doesn't change a lot. So it remains stable. You are able to recover in the first half of next year. You are able to recover Fully recovered is at 70%, 80%? Fully recovered from an absolute value, It's difficult because you don't have many occasion to have retroactivity. So to recuperate in absolute value is difficult. Nevertheless, to recover in index point of view in order to not have a carryover for the next years is our target. But as you said, it means that the prices of the index are stable. So if it's stable, It's a game of you are right where we need to go back to the index where we need to be. If it decreased, Then it's an ever gain and ever negotiation with the customers. That's why we are tracking very carefully where it will go in 2022 because It will be important for us. Okay. Okay. And the last point on Marcelo is on the guidance. First of all, RHS is projecting higher volumes in Q4 sequentially compared to Q3, Up 15%. I don't know. Should we expect you are able to outperform the market also in Q4 Q3, so should expect a double digit top line growth? Obviously, it's difficult because we never know if The client stopped production in the middle of December instead of Christmas time, but just to have an idea what is the trend in Q4 for Top line? And also for free cash flow, what should we expect for free cash flow in Q4? Yes. Good question and good point about December. My feeling is that December is going to be a long month of closing for the automotive, Especially, I would say, the German and the French. So we are preparing for that in case it happens. Usually, it was closed in 10 days. It could close longer in December, which will make sense for the wood industry Because rather than touching on November October, the customers may decide to have a long break during December in order to save As much as possible costs. So my position is to be ready as we have done in time today for the low market, For a low December, de facto, as we have done in time today, we will beat the market, whatever is the market. The question is to know exactly what will be the market. But yes, we will beat it. But I prefer to be ready For big cuts and not forecasted cuts, which is the worst because you don't have time to prepare. That's why we are very agile. And Each week, we prepare the potential closure of our customers in order to react very, very quickly and sometimes even to anticipate. So this is my strategy for the last quarter. I expect, yes, a low quarter but to beat the market. And from a cash point of view, we will continue all the actions that we have implemented in the 1st 3 quarters, Especially from a normalized point of view, I don't see a reason why our cash flow trends should deteriorate. I'm continuing to push a lot on the working capital. And one thing about the negotiations with customers and suppliers that we have, For sure, we try to get the price increase from our customers, and the price decrease are stable from our suppliers. But we are also It's pushing on the payment terms because at the end, cash is also a key in our business. I don't see any reasons why in Q4 we should have bad surprise. And from a reporting point of view, as Jan said, We have been able to generate the cash that we presented to you without pushing too much the factoring and over normalized Vision tools. So I would if the market remains as forecasted, we will continue in this way. Okay. So we should expect free cash flow generation ex factoring, so in Q4 stand alone? As we have done the Q1, the cash that we presented normalized was repoed the factoring. Jan mentioned that we have not pushed the factoring. So even we thought pushing it or reported is improving a lot versus 'nineteen and In 2020. So yes, we will continue to push the cash in quarter 4. It's key. So I don't expect any bad surprises in cash 90 more of this year. To your question, Martino, free cash flow for the full year should be close to what it is at the end of Q3. Okay. So as you said, it's 0 in Q4? It might be slightly negative, but we are pushing to get to even. Okay. Okay. Thank you very much. The next question is from Francois Robillard with Intermonte. Please go ahead. Hi, everyone. Thank you for taking my question. First one is on the P and L that you Having your press release, I see that you have €82,000,000 for other non operating expenses in the Q3. Can you please give us just More color on that? Sure. So it is linked to the special project we mentioned And which is distorting the future figures. In fact, that's why we normalized it to present it to you in Slide 12. In fact, you have we have a turnover in the revenues, and we have an invoice to our customers In the line revenues. And we have offsetted this positive effect that we have in revenues in On the line that you mentioned. So right now, the assumption in Q3 is that this project is neutral from an EBIT point of view, we have the positive effect in revenues and the offset of this positive effect in the non operating. So that's why, in fact, that's the main impact. Okay. All right. Because it was quite a bump in your fixed cost Structured, can you give us just more detail on what the project was? I guess I missed it. Can you please repeat that? No, you don't missed it because I don't see any. So In fact, I cannot give you all the details because, of course, I have some confidentiality to respect for my consumer. What I can say is that in fact, it was a special project on which BMW awarded us 2 years ago. They asked us to work on this very special project. And then in July, they decided to cancel it. It was supposed to generate turnover in 2022 and 2023. So it was not a long term project. And it was it has nothing to do with the diesel impact or electrification or whatever. It was a very special project. So the good thing about it is that, in fact, from the beginning, we define what's going to happen if we invest R and D, And spend time on it and that it is canceled because we knew they happened, the M and W was looking for some alternative. At the end, they decided to cancel it. But I would say that the settlement has been Fair. More than fair between BMW and us. And we will not have any loss about that In Q4, it will be even, I think, the opposite. We are still negotiating to settle some position with our suppliers, But I expect a positive effect of it. But I cannot disclose what was this special project because it's very confidential on the BMW side. It is not a recurring effect. This is my point. It's not linked to the diesel decrease, EV or whatever. It was something totally different. Okay. All right. And then you had €10,000,000 of positive one offs in the first half. Any other one offs We should be aware of in the Q3? Jan, I don't Except the BMW that we had very special over the game impact compared to June, right? The big Dixent was concentrated in June, yes, today, if I remember well. Absolutely correct. The increase is linked to the special projects. Remember, in June, year to date June, in fact, it was it were mainly positioned, of course, nonrecurring such Tax settlements of the previous year, pension settlements, these were the main impacts. So, de facto nonrecurring in Q4 or next year. All right. And just on CapEx for the year, can you give us some kind of guidance for the Q4? You already gave for free cash flow, but just a little bit more granularity on the composition for Q4? So in fact, our CapEx right now, the composition is very different from what we used to have in normal years. Right now, We concentrate, as Jan said, our CapEx for the Romania project to add everything ready for our customers on time. And then it's also linked to what I said about EV. The good thing about EV products, Once you are awarded, the turnover is generated 18 months after compared to 36 in the eyes. The negative effect is that you need to invest very quickly. So for the 2 big programs on which we have been awarded on EV, we will have to invest In Q4. And one of these programs will already generate turnover next year. So it's quite impressive, the time difference With ICE and media application. Nevertheless, we don't expect, of course, to spend more CapEx than forecasted over previous years. We have been quite conservative in the first 9 months, and I will continue to have a smart allocation of our CapEx. The idea is always the same. Rather than focusing on the amount, we focus on what generates value on the short, medium and long term. So right now, I allocate the CapEx of the group, where we know we will generate money and value on the long term. And it's mainly focused on EV products for except Romain plant that we are finalizing. To jump by Jean Francois, we are shooting for €6,000,000 €7,000,000 less CapEx on a full year basis than in 2019. Next question is from Roland Konen with Value Holdings. Please go ahead. Yes. Good morning from my side. Thanks for taking my questions. First question would be an add on, on the special project Sales, if I look at the non operating income after Q2, we have positive EUR 5,100,000. Now we have roughly EUR 80,000,000 minus. So it's a delta of Roughly €23,000,000 but the special sales project sales number was just €14,000,000,000 14.2 So the difference is the loss on this project. Could you confirm this? And the second question would be on the outlook for 2022, it's a bit early, I know. The IHS figures stayed for roughly €10,000,000 or €11,000,000 plus in the global production. Last year for this year, 2022, 2021, you were Very cautious. And yes, it was absolutely right. What is your guess for the next year? Do you think the 10% to 11% Well, it would be fine. Or are you also, for the next year, a bit cautious? Thanks a lot. Thank you for the question. Jan, maybe I'll let you comment the first question, and then I answer to the second. The first question, Fred mentioned it was related Mainly, it's a special project. So I'm not sure I get your point, Laurent. Yes. You had a positive non operating operating income after the first two quarters Of roughly EUR 5,000,000. Now after 9 months, you have negative expense of roughly EUR 80,000,000. So it's in delta in the just in the 3rd quarter of roughly EUR 23,000,000. And if I deduct the special product sale of roughly €40,000,000 I have a negative Loss of €7,000,000 to €8,000,000 Is this the loss you have to book on this settlement or this The full project? Or are there any other things in there? There is no loss on the special project, as Fred mentioned. It might even turn positive. We've been quite prudent in our assumptions. I need to double check the one offs because there's nothing really significant in Q3 apart from the I'll get back to you on this. Okay. That's all good. Thanks. And yes, to answer your second question, Laurent, Of course, I don't pretend to know better than EHS or whatever. It's more a managerial position that I have. I prefer to be cautious, honestly, in the 1st 6 months of 2022 because still a lot of uncertainty. So the way I see it, I don't see a miracle for Q1 and Q2 of 2022 Versus what we are facing today from a volume point of view and supply chain point of view and so on. Then the assumptions that I'm building is that most likely, NAFTA will start Quicker than Europe once the supply chain issues will be solved. So in Q3 and Q4 next year, we can anticipate good news from NAFTA. And then for Europe, I prefer to have a better position where I'm a bit cautious. It's a bit too early to give accurate figures. So we will do it beginning of next year when we present you The full year figures. But yes, we will be a bit more cautious than you, Jeff, because you don't have Macro signs that everything is going to be better next year. So this is our first feeling on that, my first feeling. And we are looking at the next year's forecast based on cautious assumptions, at least for the 1st part of the year. Okay. Thanks a lot. Maybe one additional question on your restructuring costs. They were very low in the 1st 3 months, 3 quarters, Having in mind the very difficult environment we are in, do we have to calculate with more restructurings in the next 3 to 6 months? We do expect For the restructuring in the region of EUR 2,000,000, EUR 3,000,000 no more in for Q4. Okay, great. Thanks a lot. Have a nice day. Thank you. Well, I think we don't have other questions. There doesn't seem to be any follow-up Operator, can you confirm, please? Excuse me. There is A question from Gabriela Gambarova from Bank Acos. Please go ahead, sir. Thank you. Yes. Thank you. Just a couple of questions on the tax rate, 45% in the 9 months. I was wondering, I mean, what could be for the whole year and going forward in 'twenty two and following years after the Disposal of Latin America. And I didn't get, sorry, What you said about CapEx vis a vis 2019 and possibly also for 2022? So, Gabriel, the tax rate for operating activities, because we should take apart the disposal The Latin America. It should be in the region of 40% on operating activities on a full year basis. And we are aiming to improve it, reduce it for the coming years. And on CapEx, I said that All in all, for 2021, we were currently shooting for €6,000,000, €7,000,000 less CapEx Then in 2019, despite the Romania investment. Okay. And regarding 2022, is it possible or is it too early to understand what could be the level of CapEx? I would say it's a bit too early to give you accurate figures, But there is no reason that it should be higher than this year. Okay. This is an indication I can give. Okay. Despite the Romanian plant? Yes. Because the Romanian plant's big investment has already been done This year and last year. So I don't see a very different figure for next year, but I see a different composition. Of course, Romania will continue to have some CapEx, but I see a competition focused a lot on EV products already awarded. This is where we will go. And I don't see a big delta versus 2021 amount. The next question is from Martin Odiong Borje with Equita SIM. Please go ahead. Yes. Thank you. Just a follow-up on the guidance because you are guiding for return on sales in excess of 3.3%. It was 5% in the 9 months. So I don't know if you could elaborate a bit more on this Specifying what are the nonrecurring items which are factored in your guidance this year. And frankly, I do not expect Q4 to be loss making to be just slightly above 3.3. But just to have An idea of what do you include as a nonrecurring if you can summarize What happened in the 9 months because you have many different positive and negatives which are not recurring? Sure. So in fact, you are right. In the beginning of the year, in the first 9 months, we had very positive nonrecurring impact. The first one, as we mentioned in the June presentation, the tax Item that we settled in Mercosur, which is €4,400,000 Then we settled also with the pensions For UK, very old subject, about €25,500,000 And then we have also in the 1st 9 months Positive impact for X3, so €2,000,000 And we had reimbursement from insurance for fire that we had Some years ago for €2,000,000 So you can see that in fact, in the 1st 9 months, we had an alignment of Nonrecurring and nonoperating positive effects. So de facto, in fact, once you add 2 million exchange impact positive in 1st 9 months, We don't expect the last part of the year to be so positive. Insurance, we don't have anything anymore to be reimbursed. And the tax and pension items were really one off. So in fact, one of the big delta between the 1st 9 months EBIT, you mentioned. And the last part is that we consider that we won't have any more this kind of positive 1 off impact in the last quarter. But you are right, this year was an alignment of positive non operating effects And one off impact is the 1st 9 months. And your guidance is including all of them, I suppose? Our guidance, of course, is including the 1st 9 months plus the forecast of the 3 months. So because at the end, my question would be, okay, in excess of 3.3%, but Is it possible to have a narrower range for the full year? Right now, I think due to all the uncertainty, as I have done in time today, I have done it in June, I have done it in March, I would avoid to give very accurate percentage. I know it can be frustrating for you. Nevertheless, to give an accurate percentage nowadays with all the uncertainty could be It's too unstable to give an accurate percentage. So that's why I prefer to keep this recommendation And hope, as we have done inside today, other news when we will be in front of you beginning of next year. No, it's clear. I share your view. So okay. So without giving you a number, we are still shooting to beat 2019 by Esterline. Yes. And really, I don't want you to think, all of you, that we don't want to give an amount. It's more that there are so much uncertainty that we are focusing on beating the market, doing all the actions, And we prefer to come with good news versus what we expected rather than overshooting and then a bad surprise arise. And right now, in the current environment, the bad surprise could arrive each day, and we are facing them each day as we have done it by today. Okay. Thank you very much, Pavel. Thank you. Gentlemen, there are no more questions registered at this time. Thank you to everybody for your questions and attendee. Have a nice day, and thank you again. Bye bye.