Earnings Call: Q1 2021

Apr 26, 2021

Morning. This is the Chorus Call conference operator. Welcome and thank you for joining the SOGENIC First Quarter 2021 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. Felix Cisai, CEO of Sajefi. Please go ahead, sir. Thank you. Hello, everybody. Thank you for being with us for this conference call. I propose we go to Page 4, where we have the financial highlights of Q1. The case, so let's start by the case. As you can see on the document and on the report we published Friday, our sales are up on the Q3 versus 2020 by 5%, We'd be almost 10% with constant exchange rate and versus 2019. So we would always use also 2019 as a basis of comparison. We are down by 5% on reported basis, but at constant exchange rates, we would have been at 0. So We are over performing the market. You will see that in each geographical area. And also, we have 2 business units performing very, very well I don't adopt decreasing market. The EBITDA is at almost €55,000,000 So 15% versus 11% in 2020 and also 11% in 2019. So We will see that it's both the combined effect of the profitability increase on our variable costs and big Structural actions were implemented in 2020 on the fixed costs, which decreased by almost €10,000,000 The EBIT is following this trend with 7.3% on the reported EBIT versus 2.3% in 2020 and 3.3% in 2019. In this 7.3% of the first quarter, Jan will highlight the special events. We have the equivalent of 1.3% of non recurring impacts. So We report normalized EBIT would be 6% compared to 2.3% in 2020 and 3 points in 2019. The net income is at almost €12,000,000 versus a loss last year and €1,600,000 in 2019. And we have been able to convert the €55,000,000 of EBITDA with a quite good Free cash flow was EUR 33,000,000 positive free cash flow in this quarter, versus EUR0 last year and a loss of EUR 2,000,000 in 'nineteen. The net debt is at EUR 260,000,000 versus EUR 290,000,000 into the end of 2020. And we are back at the level of March 2019. Page 5, we have the details of sales per month With the 2 years, so as you can see, overall versus 2019, we are losing 5%. But this trend is improving in March, where we are almost in line with March 2019. This is mainly thanks to the start of of new programs that we have in North America and in China. Page 6, We have received by geographical area, headcount versus 2019 versus 2020 And also versus the market. So I would compare versus 2019 because last year, the impact of COVID already started to Thank you, Jessica, Ariad. Versus 'nineteen, as you can see and as I said before, we are decreasing by 5% on the reported change, That's 0% on at constant exchange rates. In Europe, we are at minus 7%. North America At constant exchange rate, we will be almost flat. In South America and Asia, we have a good growth. And you can see that we are beating the market in all the vertical areas. We see by business units, Page 7. So 2 business units, as I Sales are over performing versus the market and also versus 'nineteen. R and cooling and filtration at constant exchange rate We have grown by 6% versus 2019 for Enkruin and 6.6% in inflation. Suspension at constant Stream growth is decreasing by 11% versus 2019 and 17% on the reported basis. This gap between the business unit is mainly It's mainly due to the different mix by country and also to the fact that situation has the OES and EIM, which are performing very well and are kind of both ways that see the decrease on the OEM market. Page 8. So just a few words about the new business award because on this quarter, we have done well from a financial But we also continue to prepare the future, and we have many awards on our main customers, both with the historical customers and new customers. As an example, in our end cooling, we signed an important contract With an American OEM, we have a lifetime value of more than $250,000,000 On filtration, We have continued to acquire market share in particular with oil filter in North America and also in Europe, and we have signed A quite good contract on the cardinal filters. And with suspension, we have already acquired 35% All of our contracts are on eBridge and fuel cell application. Page 9, it's a visual bridge of the EBIT 2019 2021, sorry, that is the EBIT 2019. And then we will have details on the P and L and the free cash flow. So as you can see, unfortunately, versus 'nineteen, we have And the negative impact of volumes by €60,000,000 partially compensated by efficiency on variable costs for Positive EUR 3,700,000. And then we have the fixed costs, which are helping us by EUR 10,000,000 compared to 2019. As you know, we have launched structural actions last year in 2020 in order to be ready for decreasing market, And this really helped us to offset the negative impact of the market and also improve the profitability. 1st, we had this quarter EUR 60,000,000 of positive nonrecurring and operating items that Jan will highlight to you. So at the end, versus my team, we are able to double the absolute value of EBIT In a decreasing market and with decreasing sales. Page 10. I'll take note of that. So the P and L versus 'nineteen 'twenty, it's Mainly a combination of revenue catch up and reduction in fixed costs. This is true for versus 'nineteen as well as versus 'twenty. What is very important To note is that we have a rebound in phase of Fred pointed out versus 2020. We are still not there regarding 2019. Overall, March was quite good, and we are facing headwinds in terms of markets as Fred probably We'll emphasize later on. As you can see, contribution margin held up quite well in difficult markets. As you all have read, there are demands for increases in raw materials. And despite these demands, We've been able to hold very strongly our contribution margin in Q1. It might turn more difficult in the coming quarters. Gross discussed, it is one of the main reasons for The improvement of profitability versus 2019, Fred said it already, €10,000,000 savings versus Q1 2019. So £10,000,000 versus pre COVID-nineteen. And this is recurring. This is something we'll get quarter after quarter. Important to point out that in this quarter, all the planets were aligned. Not only was there a recovery of sales versus Q1 2020, which was the 1st quarter we were hit by COVID, but we also have Positive impacts in Q1 2021. As you can see, favorable exchange differences, which is quite unusual. And this is mainly due to the evolution of the euro versus the dollar. And you see it makes quite a difference versus Q1 2020, Where we had a hit of €3,400,000,000 So this line alone explains a €5,000,000 difference versus Q1 2020. The difference is less significant versus Q1 2019. But nonetheless, please This is 1.7 of favorable exchange differences as non recurring. It's not something we can expect every quarter. The OilSuite did benefit in Q1 from a EUR 2,400,000 settlement. It is a very old litigation. It goes back, I think, 15 years. And we had a litigation against former advisers. And we have reached a settlement with them recently, and they are going to pay in April The total amount of €2,400,000 to close the litigation we had with these 3 advisers. So again, Non recurring, of course, it happens only once. And that's why if you take out both exchange differences and this Windfall of €2,400,000 EBITDA would be at roughly slightly above €50,000,000 That's to say 14.2% versus 11.2% in 2019. And if you go down the P and L, If I take out again these €4,000,000 of exchange differences and this €2,400,000 1 off, EBIT would be at €21,800,000 That's slightly above 6% against 2.3 in 2020 and 3.3 in 2019. I take the opportunity just to say I said it already, the planets were aligned in Q1. We are now facing headwinds, so I don't expect as good a quarter in Q2. There will be difficulties with volumes, which are linked to the market. Whole materials are difficult. So don't treat that as recurring performance. Obviously, there is an improvement versus 2020 2019. We are going to do as well as we can, but we are not projecting a good performance in Q2 2021. If we move to Slide 11, free cash flow. Free cash flow is roughly duplication of the P and L. You can see it's fairly easy when all goes well. More volumes, it means more contribution and you see quite a difference 1st of 2020 and versus 2019. And we also had favorable impact in terms of working cap, Added to which some one offs in terms of cash, we cash some tax credits, which are included in the EUR 7,400,000 in others. I think we cashed EUR 4,000,000 of tax credit in France. So all in all, A positive free cash flow before IFRS 16, the real free cash flow of the company positive of EUR 33,000,000 Versus roughly 0 in 2020 and a slight cash burn of 1.6 in 2019. What's more relevant to us is when you look at the net debt again before IFRS 16, It's very significant. You just said EUR 261,000,000. We have gone back to the end of Q1 2019. That means It looks like there has been no concern in the past 2 years. So we've gone through the crisis without burning cash. And this shows in Slide 12. When you look at Slide 12, the first column It's a total of committed lines we have end March 2021. So a total of €620,000,000 of committed lines. As we have just seen, NFP end of March 21 was negative EUR 261,000,000 which means We have an excess of €360,000,000 of committed lines versus our net financial position, A significant part of which, it is the orange box, which you can see in the second column, will be used in the month of May to repay the €100,000,000 bond, which is expiring in May 21. Average maturity of the lines is 3 years. We are already working on new lines, and we should close new lines in the region of Certainly, shortly. Probably too early to work on the renewals. Renewals, it's mainly The green boxes in 2022, 2023, but probably as we hope we are going to confirm good results During the year, we are going to start talking with the banks to renew the 2022 and 2023 lines In order to have a larger buffer than we already have for the time being. Fred? Thank you, Julian. Page 13, we have the split of sales by business units. So as you can see, filtration is now the biggest Thank you, Amit. With 35% of the sales, mainly thanks to the good performance of OES and Assay markets. Page 14, if we look at the performance of the suspension business unit. So this is the business unit where the impact of sales decrease is the biggest Compared to 2019, as you can see, we are nearing 17%, so quite close to the market. But we are thanks to the actions that we have implemented on the fixed cost and other contribution margin, we have been able to improve the percentage of 2018. Page 15 Filtration business units. So sales are globally Flat versus 2020 2019 in a decreasing market, so it's quite a good performance. On the EBITDA, we have been able to turn actions on the margin and also in the fixed cost to go from 11% in 2019 to 15.5% in 2021. Eren, Queenie. The sales are growing in the 2019, so thanks mainly to China and North America. And the percentage of EBITDA continue the improvement that we started almost 5 years ago now, And we are above 18% of EBITDA for the Q1 in 2021, with 2 geographical areas performing very, very well, China and North America. Page 18, so the look on the market outlook. So of course, I think you know it very well. It's quite probably to have a very accurate estimation of Q2, Q3 and Q4, mainly due to the raw material shortage that our customers are facing. So we have customers that may stop the production from one day to another with very short notice. So we have faced that in Q1, and I think we'll to take that in Q2, hoping that Q2 and Q4 will be better and more stable. For now, our position is very clear. Of course, we consider the forecast of EHS as a working baby, but I prefer to be very prudent on sales Because of the potential shortage on the materials, I'll continue to be very, very aggressive on the cost structure So that we are ready for the awards and if there is a good news on sales, it will be like Q1, a transformation on the EBIT and EBITDA. Page 21 sorry, Page 19, so it's exactly what I mentioned. EHS is expecting a strong rebound versus 2020 in Q2 and also for the last part of the year. Nevertheless, we will still be below 2019 by 6% According to EHS expectation, plus it can go worse due to the material shortage. So with Jan and the team management team, we are continuing to monitor the activity almost weekly or daily in some vertical areas to be able to adjust very strongly and quickly the fixed cost in order to maintain our profitability. The target right now is a bit too early to revise our target of profitability for 2021 Due to all the events that I mentioned before, so we continue to target to be much better 2020, of course, and to go back at least at the level of 2019 EBIT margin. I think around June July, we will have a better visibility on what could be the full year sales and de facto And the EBIT margin for Sodetti. We have finished The presentation, so I think we can move on to question and answers. Thank you. This is the Chorus Call conference. Operator, we will now begin the question and answer session. Is from Monica Bosio with Intesa Sanpaolo. Please go ahead. Good morning, everyone. Thanks for taking my questions. The first one is on the trend of the operating profit margins in the second quarter. You have been very clear, the Q2 will be tough due to the headwinds on raw materials, transportation costs and whatever. But can you try to help us to figure out what could be the margins erosion in the second quarter? Because as things are, it seems to me that you can land at a Sound good operating margins in 2020, maybe even higher than 2019. So just some details for the expected margin erosion in the second quarter. The second question is on the free cash flow dynamics across the next quarters, if you can give us some highlights. And the last question is on the shortage in the automotive sector. Are you I know that the sector is under a shortage, but are you seeing any impact on your operations So, Paul, thank you very much. Thank you very much for the three questions. If it's possible, I will start by the last one because it would help us to explain the 2 other questions. So on the shortage, yes, clearly, we see the impact. Of course, not directly, but indirectly. So The short thing about, of course, the microprocessors. This one, everybody knows it. But it's also very difficult to get aluminum, plastic I'm still right now from the market because there is a booming demand in Asia. So and of course, the suppliers are pushing for price increase. So for now, in Q1, we have been able to get on quite well the proceeding pricing. And in Q2, This will be the main topic between the supplier increase potential increase and the customer Expectation of price increases. So I see a bit better here on the screen. Right now, we are end of At April, so we continue to defend very hard in order to protect the quarter and the year. But It will affect in one way or another the profitability because we won't be allowed to continue to get them too long with the suppliers. It's difficult to estimate the impact on the percentage of the EBITDA, but I would say that it can be close to 1%, To make it clear. Then from an operational point of view, I have to say that it's very difficult to operate right now Because in automotive, as you all know, we are used to have kind of stability on the volumes, at least in the daily or weekly volumes, and then it was It was a kind of global decrease. I mean, we were able to find a way to operate in this Here, it's not the case. One day, a customer is calling us saying, guys, we will stop the production, so we will not pick what you produce. And then for 3 days, they will not produce. They will restart. We will have to do all their time and so on and so on. So right now, The production and the operational way of working are really changing versus what we were always to do, And we are trying to adapt as much as we can. In Q1, we have been able to do it in quite a good way. For now, in April, we are able to do it. Plus, in addition to the issues of our customers, we have also the potential COVID situation. So For sure, to operate in this way is not easy, but I would say it's the same for the wool industry. And for now, end of April, we have been able to go through that in one way or another. I hope it will last in May June, But this explains also the reason why Jan and I, we are very prudent in the figures of forecast because To operate in this way is quite difficult. Yes. I have understood well. On top of the raw material impact, you could have an impact from the stoppage in production will be volume. Is this correct? Absolutely, because it happens to us each week. One customer who was supposed to produce and work is stopping because he has stoppage he has shortage of Of complement or because we are COVID-nineteen, plus in the same time, we have the same issue with our suppliers. So right now, the supply chain is stressed, but as in Q1. And right now, we are able to manage that. But I don't know if in May or June, it won't go worse, especially in some countries, for example, in India, Well, the COVID situation is going very, very bad. So this is what explain why Jan and I, we are very Prudent. You have issues with the customers, issue with the suppliers plus potential issue in some countries due Nevertheless, if we look at the positive side of the coin That we are able to react very quickly from an operational point of view. So if one consumer is decreasing the volumes or stopping this plan, We are able to react very quickly and stop our plans and see what kind of help we can get from the local government Or using the holidays and so on and so on. So right now, from an operational point of view, we have been able to flex The fixed cost or the variable cost when we need, it's just that from a supply chain point of view, it's a bit Difficult to manage, but I think it's the same in the crude automotive industry. Okay. Very clear. Thank you. So that's why it's a longer sentence to say that. I would prefer to avoid to give you an indication of the cost of Q2 due to all these things. Nevertheless, if we normalize the EBIT of Q1, it's 6%. Of course, we want to decrease to 2%. So what we have done on fixed costs is here, it's recurring. What we have done in fact today on the variable cost each year, and it's on the pocket, if I can say. So here, we need to be able to defend with the consumer, with the supplier and, of course, from an operational point of view to avoid big issues. Okay. And when you turn on cash conversion and cash projections, we have the same approach on cash items As we have on the P and L, due to the current environment, we are very cautious on our CapEx commitment, on our inventory, On our working capital, customer overviews in order to be able to overperform A normalized situation if we have bad surprises due to the difficulty to operate currently. So One thing that can impact the free cash flow are the inventories, because due to the shortage, we keep So more inventory than what we are used to do, especially in steel and plastic in order to avoid the customer shortage. But again, it will not consume all the advantage that we had In Q1. But we prefer to be cautious again on the guidance. Very clear. Thank you very much. And Monica, it's not over prudent. Our goal in Q2 is to keep the advantage we generated In terms of free cash flow, definitely do not expect a similar cash generation as in Q1. It's not going to happen. Yes, I'll give thank you very much. Thank you. The next question is from Martino De Ambroggi with Equita. Please go ahead. Thank you. Good morning, everybody. The first is a follow-up on the raw material. So maybe I missed it, but could you confirm what was Rough impact in Q1 coming from raw materials. And second question on raw materials is, Could you remind us in the current environment, what is your ability to pass through These are the material price increase, rough percentage of what you are affiliated to pass. And third question, is it true, some other players are saying that since also carmakers Are able to pass through or at least to limit the incentives when they say to final consumers that the Negotiation is always tougher, but less tougher than it used to be in the past. And the second question, the 3 questions on the raw materials. The second big Issue is the fixed costs, because you saved BRL 9,600,000 in Q1. Should we multiply by 4? Probably not. Just to understand what is the potential of 3DR benefit in terms of Fixed cost reduction. Thank you. Thank you. So the rough estimation of the impact On raw material for Q1, but it's mainly for 51 business units in steel. We are close to about €2,000,000 versus the Q1 of last year. So EUR 2,000,000,000 increase from the suppliers, mainly on steel. And right now, what we have been able to pass through is 50% right now, And we continue the negotiation with the customers in order in Q2 to get back the remaining parts. So there is not a general rule for each customer with the contracts clear, Which is the time frame we evaluate with 6%. In fact, it depends the history we are with this customer. For example, when the steel goes down in 2019, we have not decreased the prices with The customer, so right now, the customer says, as you come to us, once in an increase, but in 'nineteen, we have not decreased it. So it's based on negotiation. Our team are quite strong in that about the squeeze management. And of course, it's all about timing because Most of the time, if you get an increase beginning of the quarter, it's very unlikely you will be able to close the negotiation in the quarter. So The tempo will be very, very important, especially because we don't know until when it will last. I don't know if it's just a bubble and in July, I guess, it will normalize or if we are in this trend for 2 year, 3 years. So that's why we are very, very defensive with the suppliers before going to the customers. Because to answer your First question, no. My feeling is that with the customers, it's not more easy than before. I wouldn't say it's more difficult, especially With 2 customers growing because they are not combined, for example, so We have more strike force, and it's more difficult to negotiate with such a giant. So T18 and TIE are not together. And with the German customer, it's the same. Before getting the price increase, the negotiations are very tough. So one of our strategy is also to leverage on the interruption that we have on the volumes or the big sales volumes The increase that we had with some customers and not to give the productivity, the yearly productivity that we are supposed to give in 2021. So rather than asking for an increase of price, we try to block the decreases of prices that we should have done in 2021. And this has been our strategy in the Q1. And I have to say, it works very well. But no, the pressure is just Very, very high from the customers because they are like us. They want to protect their P and L and their productivity. So my feeling is more difficult than before, That we are about to do as good as we can with our size and squeeze between giant suppliers and giant customers. The fixed cost, unfortunately, no. It's not a €10,000,000 multiplied by €4,000,000 Why? Because in fact, From 2019, we already started the reduction on fixed costs. So for example, in Q2, Q3 and Q4 of 2019, There were already some actions that we started in the quarter before. So there is a kind of carryover Quarterly by quarterly, but for sure, the positive impact of fixed costs will be with the permanent for HS 'nineteen and HS 'twenty. Plus, we have some big structural actions that we implemented and that we are still implementing that will have a positive impact in Q2 that we don't have in Q1. 1 is the strong reeducation that we are doing in the 8 quarter of situation. The process is about To close in April May with savings from the 2nd part of the year. So If we have negative impact in one way, in the other hand, we will have also positive actions that we are continuing to implement If I may, Fred, to drill down on your answer and to answer Martin There are many actions underway to further reduce fixed costs. So at present, we don't expect fixed costs to increase 4 times Q1. Okay. Thank you. If I may follow-up on CapEx, just to have an update if you changed your mind on the Total amount for the full year. And you mentioned that inventory are higher because you want To avoid the shortages of components, raw material and Sion, could you quantify this impact that you expect Going forward. Sure. So for the CapEx right now in Q1 2021, there is a budget that We initially had we have been able to over perform. Jan, I don't remember exactly the amount, but we have been very conservative on the launch of We will try to maintain this positive impact by the end of the year. So no, we have not changed our mind means we will continue to invest on new programs and everything to safety. But We have always we have the double check before investing in the past. No, it's a triple check. It means before investing, we want to be sure that the activity We'll justify this increase of capacity or, for example, productivity actions. So the strategy is still the same, But we are more cautious when we launch CapEx, and also there is a continuation of the market. Inventory, right now, we are 2,000,000 more than we would have had in a normal situation, mainly in steel and plastic. I would like to keep this to you as long as the market is under pressure. Thank you. And once we will feel that the market is stabilizing slowly, but surely we will decrease these extra inventories. Okay. Thank you. The next question is from Francois Bjar with Intermonte. Please go ahead. Hi, everyone. Thank you for taking my question. Can you just come back on the nonrecurring costs included in your 1st quarter margin, I see the €5,800,000 on Slide 9 on EBIT. Can you just recall quickly What's within the EUR 5,800,000? And what amount is also reflected in the EBITDA figure? Thank you. So Francois, the big chunk is the EUR 2,400,000 settlement Which closed our litigation with former advisers. Then you have EUR 1.7 billion of EUR 1,700,000 of favorable exchange differences. And then we had some recovery some insurance recoveries In the region of €1,500,000 which of course are not recurring on science that took place last year. Operator, do we have more questions? The next question is from Gabriela Gambarova with Banque Please go ahead. Yes. Thank you and good morning to everybody. My question is a little bit more strategic. And you correctly put much emphasis on the new contracts you got for hybrid and electric vehicles. I was wondering if you could remind me what is in your understanding the value For each vehicle, for each electric vehicle in comparison to an ICE vehicle, In sum, I would like to understand how much you are going to profit in terms of value for Thank you for the question. So The 3 business units are not impacted in the same way by electrification or hydration. So to start by the most easy one, suspension, I would say that it's not clear here as it is nothing to the engine. Suspension is not directly impacted. Nevertheless, As the other business unit, suspension needs to adapt its customer base because as we all know, there will be new commerce and new customers in the So our strategy with suspension is to share it with new customers in order to be ready when they will get market share To propose them our suspension. Situation, it's negatively impacted in the first time because The decrease of the diesel. So of course, there is a decrease on the diesel. In the other hand, we are able right now to compensate, not with It's elliptical or hybrid engine products, but with the switch of our product range From purification of diesel to purification of air or oil. That's why the last 2 years, we really changed a lot of new businesses In this area, in order to increase our market share in air and oil to offset the decrease that Very on the detail and that they will continue to have. So as you have seen in the figures, right now, it's working quite well because We are over performing versus the global market. But in fact, inside this market, if we look at the bigger decrease, it will even be a bigger decrease. So this is for filtration. And the new product that we will have on filtration won't be used directly to the electrification or Hybrid digitization, but more on the new trend of the periodification of air inside the car. For Air and Cooling, hybridization is a good need because with the cooling side of this business unit, There is a multiplication of cooling projects. For example, in a ICE car, you have 1 electric car 1 water pump. In a hybrid, You may have 2 or 3 water pumps. The same thing for the thermostat we're doing. There are more water depths. So right now in Air and Cooling, we are benefiting from the I will talk because we sell our new products for the electrical side of the engine and we continue to sell the ice application products And then with the full electrification, The range of alum cooling products, we have already a lot on the shelf, ready to sell As we are doing currently, we are working already with full EV players in Europe or in China. And of course, we work with our traditional OEM, traditional customers On the electrical side of their product range and product portfolio. So Air and Cooling is really from right now benefiting from this trend. But we need to be cautious because there are a lot of development, a lot of program. It requires a lot of L and D, And we cannot do everything because at one point, the technology is not fully matured yet. So that's why my strategy is to work with A few trends where we think they are very advanced from a technological point of view, understand how it works, Get expertise and once that the volume will increase, choose our customers and the product on which we will go. But right now, the business nomination in our end cooling is quite high for electrical application or full EV customers. Okay. Many thanks. And so just to come back to CapEx, I didn't understand if you are confirming the 110 target you gave last time We are more cautious than that. I think we will not spend these full amounts. Why? Because a lot of uncertainty on many things. Nevertheless, we'll continue to invest where we need to invest. So I think we'll be closer to €100,000,000 Okay. Thanks indeed. The trend is here, but maybe not the full impact. Okay. Thank you. You're welcome. The next question is from Roland Kronen with Value Holdings. Please go ahead. Yes, good morning from my side. Thanks for taking my questions. Congratulations to the figures in the Q1. I've just two questions more on the housekeeping side. First one is on the discontinued operations earnings line, where we Negative impact of €800,000 What would be the best guess for the full year at that line? And the second question would be on your tax code. It was very low at 31% in the first quarter. Is there a positive influence of the capital gain in there? I have in mind your midterm target is roughly 30%, But in my mind, not the target for 2021. Maybe you could help us there what would be the best guess for the tax Fred, maybe I'll take both questions. Discontinued operations, We do not expect a higher amount for the full year. We've even been prudent in Q1, so Certain items still under discussion. But definitely, for the time being, we do not foresee any Big adverse impact on a full year basis. Regarding tax, I said in the last Call that we were shooting for something in the region of 30%, 40% tax rate. We're still shooting for it. It's what we've done in Q1. So it depends on results by geography mainly. But the fact that we disposed of 1 large entity with a significant impact Regarding taxes at the end of last year, this helps us in going for this, let's say, 30%, 40% tax rate. Okay. Many thanks and all the best. Gentlemen, there are no more questions registered at this time. Thank you for your attendance, and we look forward to The next call, which I believe is going to be for the future results. Ladies and gentlemen, Thank you. Good afternoon. Bye bye.