Earnings Call: Q1 2020

Apr 21, 2020

Morning. This is the Chorus Call conference operator. Welcome and thank you for joining the Progesis First Quarter 2020 Financial Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to answer questions. At this time, I would like to turn the conference over to Mr. Mauro Frenzic, Chief Executive Officer of SoGESI. Please go ahead, sir. So good morning. Thank you very much. Marafin speaking. First of all, welcome to everybody. I hope to find you and your families fine in this difficult period of time. I have with me virtually Jan and Stefan helping me on the results Q1 results presentation. I think you have the presentation. I would like to cover today three points. First of all, I would like to drive you through the Q1 results. 2nd, I would like to give you an update relevant to the current period of time. And third one, even if it is a difficult point, we are going to talk a little bit about the next period. So jumping to the Slide number 3 with the Q1 2020 highlights. We closed the quarter with revenues at 350,000,000 euros which are compared to Q1 2019 that were 389.9 percent, down 10%. But if you consider the market trend of Q1, Suggested has been over performing the market by 1591 basis points. The positive side of the coin of this quarter has been that year to date February. We have to remember that in February, China was already in lockdown because of COVID. We had a good performance in terms of revenues because we were up 1% in all the geographical areas. And this was showing a good trend of the company that is the result of the actions taken in the previous period of time. Jumping to the profitability side, so we go to the EBITDA level. We closed the quarter at €39,000,000,000 It is a number compared to the revenues, which is 10% on sales. We have to keep in mind that last year, we did 10.6% on sales. So even if the period has been a difficult period because of China and because of the European and North and South America trend on the closing plans. We have been able to keep in percentage the selling EBITDA level with some actions in different areas. Again, I have to highlight that in February, we were at 11.4 percent with respect to 9.6 percent. And most of the improvement year to date February was coming from the suspension business, which improved quite well in the last period of time. Going to the EBIT level, we closed the quarter at $3,700,000 which is 1.1% on sales on Q1 versus 3% of the same quarter last year. We had an exceptional event in Q1 2020, which has been accounting for $5,000,000 because we had the negative exchange rate effect in Northern and South America. We have to keep in mind that in March, Sorgeffi, as you will see later, closed most of the plants in Europe and North South America from March 2018. So of course, the March month, you will see later, has been heavily affected on the volume side because of it. But we have been able immediately to act at cost level with a EUR 3,000,000 positive number. On the net income, we are at minus €5,600,000,000 But if you look at it after tax exchange charges, we are at €2,500,000,000 versus €3,600,000 in Q1 2019. On the free cash flow, we closed the quarter almost at breakeven, so minus EUR 400,000, which is more or less in line with the Q1 2019. Also from the cash side, the quarter has been quite difficult because of COVID, but the company has been able to protect cash pretty well. On the net debt, we closed the net debt end of quarter 1 at EUR 250 6,700,000 versus EUR 256,200,000 end of 2019 and the 262 end March 2019. This is summarizing the highlights of the company. If we go to the Slide number 4, we see the revenues and the sales by geographical area. You remember that Europe for SOGEP is the most important geographical area in revenues. And the company had been able to go to 222 €400,000, which is 9% less compared to Q1 2019. You see in this slide the reference market production on the right, which is minus 21.3 in Europe. So on the most important geographical area, Sogefi has been able to, again, to make a good job in revenues and volumes. We did also well in North America. I keep in mind that North America closed also partially the plant in the second half of March, but the volumes are quite in line with the expectation and quite in line with the previous year. Unfortunately, jumping to the lower line, China, on the other side, affected by COVID went 31% less compared to last year. But as you know, the volumes we do in China are not high compared to the rest of the footprint. Overall, we did EUR 352,000,000, as I said, EUR 1,000,000 versus market production reference down 25%, and we were down 10%. If we go to the business units, if you can follow me on Slide number 5, Here, the situation is different view by view, business by business, and I explain you why. First of all, I'll start with the most typical one, which is suspension. The closing dates of the suspension plants have been compared to the others that are supplying components for engines a little bit earlier, so a few days earlier because most of the customers started closing plants dealing with final assembly operations. And this is affecting, unfortunately, the suspension volume, which is a 21% down compared to last year. Filtration has been able to keep the same volumes we had in 2019 because we have been able to leverage aftermarket a little bit better to balance the period. And Air and Cooling, which is supplying engine components, is down 8% compared to last year and achieving EUR 100,000,000 revenues in the period we are talking about. Going to the Slide number 6, there are no major changes on the customer standpoint, portfolio standpoint. Just we are growing quite well in Germany with BMW, which is the last customer of the list. Ford is also growing. The decrease of GM in United States is very temporary because we are going to recover GM volumes pretty fast in the coming period of time. Going to the next slide, which is the number 7, you see the EBIT Q1 breakdown in the main components. This is showing the reaction of the company with less volumes, EUR 30,000,000,000, EUR 0.6 1,000,000,000 on efficiencies and on fixed cost because among the 2, we are talking about EUR 8,400,000 better, bringing them to the EBIT of $3,700,000 end of the quarter we were talking about. On Slide number 8, you see the split between the 1st 2 months, so January, February with respect to March. January, February has been affected by COVID in February in China. But to be honest, due to the volumes, the lower volumes we do in China compared to the rest and the better performance of the rest of the group, we have been able to deliver a result which was better than 2019, as you see on the EBITDA level and EBIT level. In March, where Europe and the Americas started really the lockdown period of the plants, of course, the result has been different. And we implemented already a first set of actions to limit the cost. But of course, during the timing, we have been able only partially to offset the situation. Now we go 1 by 1 through the 3 businesses. So let's start with Slide number 9, which is suspension. Again, suspension is showing that even with the lower volumes, the business has been able to flex the cost and the structure in order to confirm the profitability. Again, EBITDA, when EBIT went from 1.8 to 1.7, so it's been in percentage quite stable. And we had also the benefit here not only in efficiencies but also on the material cost because if you see at EBITDA level, the margin went up from 8 to 9.4. And again, the EBIT is also showing and reflecting the incidence of depreciation because of the new volumes. If you go to Slide 10, you see the trend of steel price. Of course, due to the last period of time, the steel price is showing really a trend, which is the one you see in the slide, which is reduction driven. If you go to Slide 11, we go to filtration. So filtration, as I said before, went very well on volumes because the volumes, as you see, compared to last year are quite stable. On the profitability side, we had a negative period, but we have to highlight that in South America, mainly South America, we had on EBIT level €3,200,000 negative effect due to exchange rate. You have also to consider that in the period of time, we have the Morocco plant in startup, which is affecting also the profitability of the business unit. The sales are in filtration, very sustainable after the COVID event, really not only Europe, but also in North and South America. Going to Slide 12, we talk about Air and Cooling Business Units. On the volume side, we discussed before, we had 8% less volume due to the plants closed in Europe and in Americas. On the EBITDA EBIT level, we have to highlight again that we had a volume decline. And then also here, we had a negative exchange rate effect for 3 more than $3,000,000 in North America, which affected unfortunately the EBIT of the business unit in a relevant way. And this is giving you a business feedback. Now I would like to leave to Jan the task to drive you through the next slides. Thank you, Mauro. So we are moving to Slide 13. As Mauro said, in EBITDA, we were very much hit in March by the high volatility of foreign currencies, mainly Latin American currencies and also USD versus Canadian dollar and this happened at the end of March. So with a negative impact of €5,300,000 for the company, without which we probably would have had an EBITDA in the same level as the previous year. In terms of financial results, you see there's an increase of interest and this is linked to the €75,000,000 private placement we signed in November of last year. The rest, there's not much to say, less income tax. And you see that last year, we had still revenue from the plant we then have sold in the 2nd quarter. So to move to cash flow. Cash flow, many items there. Working cap more favorable, reduction of receivables. Tangible CapEx, you can see €11,000,000 on the first quarter versus slightly less than €9,000,000 in the same quarter of 2019. The increase is largely due to the new plant in Romania, €4,300,000 and Mao probably will say something about it. We then took measures to reduce further investments in the coming months. Intangible and tooling reduced by €3,000,000 versus the previous year. Others, it's mainly long term receivables and tooling commitments. It's similar to the previous year. The good point is that despite the sharp reduction of sales in the month of March, we end up with free cash flow without IFRS 16 impact, which is slightly better than in the previous year, which means that we've reacted quite fastly. And as you can see at the bottom of the slide, factoring was used up to €96,000,000 end of March 2020 versus €114,000,000 in the similar period in 2019. Moving to Slide 15, just a quick reminder, which I referred to earlier, we signed a €75,000,000 product placement in November 2019, which will mature in November 2025. So this gives us a lot of comfort. At the end of March 2020, the group has financing in excess of roughly €300,000,000 of which €125,000,000 of bank lines, which we have not drawn at that date. And the way forward in June will have roughly slightly more than €500,000,000 of committed financial lines. So good enough to in this troubled times, despite the fact that in Q2, we have to reimburse €38,000,000 of former private placements. So this is accounted for. And despite this, we'll have more than €700,000,000 committed lines end of June. Mauro, maybe I hand back to you for an update on COVID. Thank you very much, Jan. So the next slides are going to cover the current very critical phase we are crossing. So I go to Slide number 17. So first of all, the company took all the actions to protect our employees, starting with China in beginning of February. We acted very fast in protecting even before the government put in place the relevant processes with quarantine periods, our employees coming back from China. We have produced a lot of meetings, starting really smart working in Europe and later on in all the network, global network. And what we did very well has been to be faster in the second half of March to talk with the unions plant by plant in order to cover properly the closing period with agreements. By the way, we found the unions everywhere very proactive and very open. The only exception has been Argentina because the government took the decision to close the plants one day for the other and that is the only exception in our footprint. So as I said, the plants most of the plants closed between 18th March. And you will see later, because we have a map showing where we closed and where we are not. We have China that, at the beginning of March, started reopening and delivering products to customers. And we have U. S. And some other few exceptions working partially for the customers, too. We have used and we are using the technical and employment, local government support tools globally. Of course, in Europe, these tools are much more effective than in the other footprint. And we are daily monitoring and managing with the task force the cash of the company, and we are revising daily investments and cost relevant actions everywhere. At the moment, the situation, as you know, is quite unclear on the start because we are talking about the global footprint and country by country, there are different forecasts. But in general, the feedback we are getting from most of the customers is that between North America and Europe, we estimated to reopen some of the plants between the end of May. But this point is really subject to the government, subject to the volumes and subject to the customers' plans. Going to Slide 18, you see the plant picture. We have, as I said, we have some exceptions in the plant perimeter. U. S, as I said, is partially open delivering product to customers. We have Canada and Mexico on the other side closed. If you go to South America, again, South America, which for us are 11% of sales, have been closed between March 'nineteen in Argentina and March at the end of the March month in Brazil. In Asia, China really restarted, as I said, and India closed on March 23. And in Europe, there has been a progressive closing action in all the plants between 2018 27 March, which has been followed by all the countries. On the next slides, we are going to talk about the future. So I go to Slide 20. This is a very difficult slide because to do forecast in this period of time is really quite challenging. We summarized in this slide the forecast coming the last forecast coming from HHS. And on the full year 2020, today, the most probable number is in the range of 20%, 21% less production and market sales at full year. And you see how this is considered the split region by region between Europe, North America, South America and Asia. We are monitoring very well the China restart because it's the first sign of the recovery. Here, you see that also the Asia Perimeter is showing a possible reduction in the range of 17%. This is really, for us, very key to plan 2 things. 1 is to act on the current days in order to keep the cash limited as a minimum. And second is to reshape really the company to the new volumes that for some time will be applicable probably in the automotive market almost globally. Going to Slide 21, we are really considering, as I said, work car production forecast for the year between 20% 25%. And we are working at the moment on this scenario for 2020 for the company. It is very difficult then to forecast the 2021 year, to be honest, because we don't know where the market is going to place country by country the forecast when this period will be over. As I already said, in that period of time, it is very important to manage the immediate period of time with actions, and we are managing at plant level the period in this emergency period. But on the other side, it's also quite important to prepare the company to the new volumes coming after start, hopefully, very soon. We are working very close to the stakeholders. We are very close to the Board of Directors. We are very close to the financial planners in this period of time. As we said, we will have to see really the coming weeks starting shape in order to better plan also the year end coming, I would say, very soon. So if there are no then other points, I would like to open to questions in the session. Excuse me. This is the Chorus Call conference operator. We will now begin the question and answer session. The first question comes from Monica Bosio of Banca Hina and Pesar Sao Paulo. Please go ahead, madam. Yes, good morning, and thanks for taking my questions. First of all, the first question is on the top line. I know it's really very difficult to figure out the trend for the year in term of revenues. But in the Q1, the company outperformed its reference market. It's also true that March had a partial just a partial lockdown. I'm just wondering if within a scenario of car production falling between 20% 25%, do you expect to relatively outperform this trend? Or is it more reasonable to figure out a revenue trend in line with the global car production. And as for margins, it's really difficult in this case to model the margins because there are several drivers. There are the efficiencies. There are the ForEx impact. Can you just try to help us to figure out what could be the impact on the EBITDA margins for the full year. So maybe you can give us a breakeven point after cost containment and including the total ForEx impact for the full year, if you can elaborate more? And just a last question, it's on the reopening of the plants. Maybe I didn't catch very well. Did you say that the plant is expected to reopen at the end of May or at the end of April? Thank you very much. So Mauro, thank you speaking. Thank you for the question, Ms. Mosio. Three questions, so I try to go 1 by 1. Let's start with the last one, which is the shortest to reply. The reopening, as I said, is very different country by country, also the forecast. We are saying that the reopening would be within the May of May globally. But again, country by country and customer today, we have different scenarios to be considered. But again, the reply is within May. Also because it's government driven in some areas, and the governments are just in these days deciding the date. About outperforming, so you know that I arrived in St. Jeffy a few months ago. And what I learned pretty fast, but again, we should reply business by business, to be more precise, is that the businesses are all improving quite well. And year to date, February results I showed you is proving that we were outperforming the market, improving also pretty well the profitability of the businesses. So to be honest, now we are in a very difficult period, but I expect this to be less effective, of course, because of the situation. But I expect to see this, of course, in the coming period of times, mainly in businesses like air and cooling and suspension. The last question was on profitability side, year end, and this is the most difficult question to reply Because there are a lot of factors on which we are working, by the way, which are affecting the year end. Just to give you an idea, we are now simulating what does it mean working with the new safety and health rules in the factories because this is affecting, of course, the performance of the production line and the efficiency of the production, too. So it is a period where we are focusing really, to be honest, a lot of actions to be ready and to, of course, to minimize the impact of a period that will be unfortunately difficult for everybody. It is very difficult, to be honest, in that period of time to give you a forecast year end. I think that by the end of May, we will have a much better picture of it. Okay. But maybe an idea of the breakeven point EBITDA level, maybe just the sensitivity because I know it's difficult, but there are also the ForEx impact. And so we have to figure out revenue decrease and then to include the and the efficiency, just a rough indication of the breakeven point. But Jan, can you take the question, please? Yes, sure. Monica, we don't expect to go in 2020 to negative EBITDA, far from it. Okay. Far from it. That's a good point. Okay. And the ForEx impact, they were triggered by the volatility of the foreign currencies in the month of March. So we'll tackle these issues in order to reduce the possible impact in the coming quarters. So we don't expect to have similar negative impact till year end. I would like to reemphasize what Mauro said. What we've been working on since this crisis started was to protect the company both in terms of cost reduction and cash burn. And our main priority was to look at cash, reduce cash out. And as I said before, we have we projected the company in various scenarios to see what would happen if all plants were closed in the month of April, if all plants were closed till end of May, till end of June. And in all scenarios at the end of June, we have no liquidity issue, which is a good point and probably no liquidity issue till year end at least. But now what we are working on is to keep on reducing the cash out, to keep on reducing the costs during the crisis, let's say, why star plants are closed? And as well to reshape the company in order to be able to be able to work effectively in an environment with possibly reduced volumes. So it's a lot of work to reduce our breakeven points. Okay. At this stage, we're not going to give you numbers. We are plant by plant, cost by cost, addressing each individual situation in order to exit the crisis stronger than at the beginning of the crisis. Okay, perfect. Thank you very much. Fair enough. Thank you. Thank you. The next question is from Mr. Martino De Ambroggi of Equita. Please go ahead, sir. Good morning, everybody. Three questions on the financial structure. First of all, if you can provide an indication of where you see the CapEx for the full year that I suppose will be drastically cut. 2nd, net working capital was very good in Q1. Are you able to foresee some changes in the payment terms, both payables and receivables? And 3rd, I know it's difficult to answer, but I suppose maybe not at the end of the year, depending on the speed of the recovery. But very likely, at the end of June, we will breach some covenants. I know it is difficult to talk about this, but what are the potential scenarios that you have in mind? Because I saw in the press release, you also think about the possibility to get the such a guarantee? How does it work? And just to know about your feeling on the financial structure and the covenant breach. Yes. Maura Finti speaking. So thank you for your question. I will reply to the first question immediately and then Jan will support me on the second and the third. On the first question, which is relevant to CapEx, we did a very aggressive scenario on ITER without, of course, touching critical areas like health and safety and the new projects running because we want to keep the future in mind when the market is going to restart. But just to give you a couple of numbers, if we talk about total tangible CapEx that in the budget were in the range of 67 €1,000,000 We are revising them every day. And the current picture, which is changing again every day because we are trying to protect really as much as possible the cash out for the coming months, is showing a €48,000,000 total tangible CapEx against €67,000,000 €68,000,000 So we reduced immediately €20,000,000 of CapEx to protect cash out. Jan, if you can then reply on the other two questions, please. If I may, for the intangible part of the CapEx. And Mauro, just to rebound on what you said, without cutting on the new projects, that's to say, the €20,000,000 reduction of investments does not impact the new plant in Romania and it does not either impact the new projects of our clients. So probably if the situation goes on, we are going to cut some more, but we've already cut EUR 20,000,000 Net working cap, it's a different question. Already at the end of March, we saw the impacts of the crisis on our working cap. Despite a good number versus the previous year, what we already saw was an increase of overdue receivables. That's to say, our clients are facing the same situation. And end of March, we have far more over dues than in previous periods. Over dues are in the range of €32,000,000 They were €27,000,000 1 year ago and the €27,000,000 was deemed a high number. So we wanted to sharply reduce that number. But the carmakers are like us. They are facing a difficult cash situation. And so at the end of March, we have far more late payments than predicted. Of course, we do everything we can to protect the company. So we cut we are starting to cut on CapEx and we are going to pay as we can. But on the other hand, we want to protect our environment and we are not going to delay payments to our key suppliers, small companies which depend on us. So it's a difficult game of balancing cash in and cash out that is going to happen in the next few months. Martin Auvergne, you had a question on such a and possible breach of covenants. For the time being, we've kept the possibility to go for state financing in Italy, but also probably in France. So we keep this option open, but for the time being, we don't need it. In terms of covenants, difficult to answer your question because if the situation if the plants remain closed for months months, at some stage there will like in all likeliness, there will be a breach of covenants. So the situation which Mauro described is slightly more optimistic because the carmakers start talking about reopening their plans, German plants probably very soon. So hopefully, we are not going to be in the worst case scenario. But if we have a breach of covenants because the situation lasts a great many months, then we'll talk to all the institution in order to ask for waivers. But we are not yet at this stage. As I said before, the priority is to keep cash, reshape the company and it's only when we'll have done our homework that and depending on the reopening of our clients, which will know whether there is a possibility of breach of covenants. Okay. If I may just follow-up on the investments. You mentioned the tangible, but what you can say about the intangible ones? Maro, I can answer it, Jody. Yes, of course. Our clients have confirmed they are not stopping their investments. So during the crisis, we keep on working on their new developments. So we have a lot of people in technical unemployment. Some are still working to develop new projects of our clients in order not to postpone the kickoff of these projects by our clients. Marjorie, you wanted to add a comment? No, I want to add a comment on what you said, Jan. It is a very important point because in this period of time, you have to keep a very balanced approach between protecting the company on cash out and protecting the company also in the future when the business come to restart. So we are monitoring all the new projects 1 by 1. As Jan said, most of our teams are working under the smart working environment, which is bringing the company into a really new way of doing work. By the way, the first feedback is really that we can approach the smart working, which was not new in Giuseppe because we were already applying it in France and in Italy quite well. But the first feedback has been that the teams are working pretty well even if they are at home. But the results always have very detailed management of the new projects in order to save a little bit of money, balancing the possible delays that we will have when we are going to restart. So it's not an easy question to reply, but we want to protect really the company as best to the future with a very careful management of the project. The next question is from Francois Robillard of Intermonte. Please go ahead, sir. Hi, good morning, everybody. Thank you for taking my question. So first one is on the fixed cost actions you implemented during the Q1. I see in slide 7 that you said €6,100,000 of fixed costs. Can you give us a breakdown of how much of it is due to temporary actions and how much do you see carrying on more permanently, so that we can have a better idea of the fixed cost structure for 2020, if that's possible. And then second one is on the tax charges in the Q1. So despite you had a negative profit before tax, you still had some tax charges, the same thing kind of you have some visibility on 2020 or what kind of tax rate we can expect? Thank you. So again, Marufentes speaking. I will approach the question number 1, and then Jan, I think you can go a little bit more detail on the 2. You have seen the reaction of the company in the Q1. The reaction of the company in the Q1 has been mainly driven to Europe because, as you know, we reacted very well also in China, but China for us is not a revenue making important center, while Europe it is. I would say that most of the actions we took have been urgent actions, so temporary actions to protect really the cost and the cash out of the company. I think we did a good job there because of the time we had. We are now working on permanent actions, of course, because as I said, we are preparing the company to the new volumes. And we are mixing now in April permanent with non permanent actions too. Jan, if you want to add something? So Francois, on the tax charge, you know it's a difficult question at Seu Gichet. On Q1, it's pretty simple. It's like in previous quarters. Although we have a negative pretax, we have positive companies and companies which lose money. So we can't avoid the tax charge in Q1. I'm not going to predict the tax charge for the year because it very much depends on the outlook. And as Mauro said before, for the time being, it's very difficult to predict how fast we are going to reopen in which markets and this has a direct impact on the tax charges. So please be patient. We are cutting cost, redoing full year forecast, but it will be a lot easier when we reopen the plants to know which direction we are taking. So hopefully, by the end of May, we should be in a position to be more specific on this. Thank you very much. The next question comes from Alexandre Rafferty of Kepler Cheuvreux. Please go ahead, sir. Good morning, gentlemen. Thank you for taking my questions. I have 3 questions, please. The first one is on the outlook. So you mentioned the press release significant losses. Can you please specify whether we should think about it at the EBIT or net income level? Or in other words, I computed around 20% operating leverage in Q1. So should we assume the same level for the full year? The second question is on the net debt. So you mentioned also an increase in net debt for the full year. Could you please give us some color on the theoretical monthly cash burn during the complete expenses? Or how should we think about H1 versus H2? I guess most of the burn will happen in Q2. And final question on the recovery. So hopefully, we've seen some positive weekly data recently in China, pointing to kind of a V shaped recovery. So do you think it will be the same for Europe? What are you expecting there? And what are the risk or, let's say, uncertainties on the supply chain, just to get your feeling? Thank you very much. So thank you for your question again. Marfrigo speaking. I will start with the last question, which is not easy. And then we have the other 2, which are not more easy too, but are more specific to financials. On the recovery side, on the recovery side, let's go to China. In China, we reopened the 1st week of March, and we closed March with roughly 50% of the volumes compared to the budget as the 1st partial month because not all the customers in China restarted the 1st week of March, but some of them restarted the second. Now in April, we are forecasting, because April is still running, an improvement in volumes, which will be in the range of reaching 70%, 75% of the budget. The first 2, 3 weeks or 2 weeks confirmed this trend, which is positive. This means that the market in China is really, I would say, trying to recover as much as possible. Now going to the most difficult point will be how China will go this year and how the rest of the year the rest of the footprint, the geographical footprint will fall. But I think that the last forecasts that you should remember I presented to Slide 20, are the ones that are the most probable now with the current information. What does it mean? It means that in China, probably the recovery because of the market will be better. I don't think that China will recover 100% the volumes within this year, but they will be very close to it before the year end. The recovery speed of Europe, as usual, will be a little bit less effective, I think. North America is a different subject because North America is very dynamic, good and bad. And we will have to see really if North America is going to recover faster than Europe, like I expect because I know the market a little bit better. In my opinion, South America is more a question mark, to be honest, because South America is a market which is, because of the current conditions very difficult to forecast, probably the most difficult one in my opinion. Jan, if you can reply to the other 2. And then hopefully, Alessandro, I replied to your question, which is not easy. So, Alexandre, on net debt cash burn, again, it's not an easy question to answer, but based on reopening of the plants probably in May, we expect a heavy cash burn in Q2. And we don't expect at this stage to burn cash in Q3 and Q4. When I say it on in free cash flow, I'm talking without accounting impact, let's say IFRS 16. So real cash, we see a recovery, slight recovery of cash in Q3 and Q4. The difficult part in the cash burn is that when you have no sales, you have no factoring. So if you look for a scenario with absolutely no sales in Q2, at the end of Q2, you end up with no factoring. And you saw in the presentation, we had €96,000,000 of factoring end of March. So if we all plans were closed for 3 months, we will end roughly with 0 factoring at the end of June. It's not our preferred scenario because as Mao said, carmakers seems to wish to reopen sooner. So probably it won't be that bad a situation. But again, it all depends on how fast it restarts. In terms of outlook for profitability, Mauro didn't answer and I'm not going to. It really is directly impacted by how fast we pick up. And also not only how fast our clients reopen, but it will depend also on the demand and no one at this stage know what the demand for cars will be after the crisis. So please be patient before we talk again about profitability. Fair enough. Thank you very much. It's helpful. Gentlemen, Mr. Fenzi, there are no questions registered at this time. Okay. So again, thank you very much. I thank you for your time. And what I learned after this 1st period of the year and suggest is that because of the DNA of the company and because of the structure, I found a very dynamic company, very focused on execution, and this is helping a lot in this period of time because we have to take many, many actions to protect the period. So again, I thank you very much for your time. Thank you and bye bye. Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephone.