Earnings Call: Q3 2021

Apr 8, 2021

Ladies and gentlemen, welcome to the Bank and Olesen Interim Report Third Quarter 2020 to 2021. For the first part of this call, all participants will be in a listen only mode and afterwards, there will be a question and answer session. Today, I'm pleased to present questions here. Speaker, please begin. So hello, everybody. Of course, and welcome from my side, and you for joining today's call. Just like in our Q2 call in January, we are not sitting together due to the COVID pandemic and the restrictions surrounded by it. So today, I will start by going through the highlights of the quarter and give an update on how we are progressing on our strategy execution. Then Nikolay Grendelbo, our CFO, will take you through our financials more in detail. And after that, we'll go through the outlook for 2021 Before we open up for questions as always. Our Head of Marketing and Digital and Customer Experience, Christian Biff, will also be joining us Today is part of the Q and A session. So if you move to the next slide. With revenue growth or 16% in local currencies. It was the strongest quarter so far this fiscal year. Overall, we're pleased with the results, partly that Q3 was expected to be the quarter with the hardest comparable figures to beat. If you remember, Q3 last year, we delivered positive year before special items, driven by the first cost initiative to initiate that immediately after December 2019 profit warning. The growth in this quarter was driven by strong execution in our 8 core markets In Europe and Asia, we saw strong performance across all key distribution channels, reflecting our work to improve channel execution. We have continued to focus on demand creation through our targeted marketing initiatives as well as strengthening our digital focus. We have seen this payoff as the revenue from our e commerce platform grew by 129% compared to last year. All of our initiatives resulted in a positive edit before special items and free cash flow for the Q2 in a row. The improvements were supported by the progress with our cost reduction program where we delivered EUR 42,000,000 in Q2. We added the 4 special items of €34,000,000 which was €32,000,000 better than last year. And year to date, our EBIT is positive SEK 23,000,000, an improvement of SEK 212,000,000 compared to last year. Free cash flow was positive by $8,000,000 It was lower than Q3 last year, but driven by the development in working capital, which was as planned and expected. Year to date, we have improved our free cash flow by SEK 220,000,000, delivering SEK 35,000,000 in positive free cash flow. This is a significant improvement from last year. I will talk more in detail about our outlook at the end of this presentation. Our outlook reflects increased prices and challenges with component supplies, which will have an adverse impact on our Q4 results. For that reason, we maintain our outlook for revenue and we added the 4 special items. However, with the development in our free cash flow, we have decided to narrow the free Cash flow outlook stood up to the upper end of the range and now expected to be between €100,000,000 So if you go to the next page. Components scarcity has been a recurrent theme in fiscal due to a combination of higher demand in consumer electronics car industry, SLF supply Component supply constraints. Adding to this, component supply was impacted by multiple external events ranging from power outages in Texas, In Taiwan, in fact, in Japan, as a consequence of the component scarcity, we experienced Further increased sales in prices of components. In March, we decided to increase our prices on several products to mitigate for the increased Cost of goods sold. The challenge of getting components impacted our dividend to meet demand, which means that we again A larger backlog going out of Q3 than we would prefer. Logistics remain a challenge like in the previous quarters. And due to the supply Same pressure, we still shipped the large part of our products by air to meet demand. We have increased the use of rail freight for some bulkier products Finally, Q3 was impacted by lockdowns in several markets in Europe, and around 40% of our Monogram stores were closed During Q3, we did see our market reopened again, though around 20% of the stores are still temporary closed. Many of those who have contracted run installations to cycle of towns, but it did, of course, impact the operations And highlight of the importance of digital demand creation. If you move to the next page. As always, will take the opportunity to show our strategy how to outline how we're executing on our strategy. We are still in the first stage Our focus is on fixing the basics and becoming profitable again. However, not so our strategy work is also laying the ground for the next We still have a lot of work ahead of us, but I'm encouraged by the progress we have made both financially I mean, the underlying business is quite the challenges related to COVID-nineteen. We have made significant improvements in many areas So far this year and this quarter, and we're really starting to reap the benefits of this work. I will give you an update on some of those focus areas on the next couple of slides. So go to Page 7. In our 8 core markets, 1500 and Ciminancial, we delivered 13% and 12% respectively of growth In local currency, if we adjust for end of life product last year, both 8 markets delivered more than 20% revenue growth. The growth in the fixed core European market was driven by strong sales in the safe and flexible bidding categories, with last year delivering Hi, Gavin. This is so great compared to last year. From a channel perspective, 4 core channels performed with multi brand e paid and own e commerce platform The work we completed in H1, the revamp and strength in our multi brand channel is now showing results As Maltebrand and EBITDA grew by 152 percent in quarter 2. Our monobrand channel was on par with last year With more than 60% of our monoblon stores being temporary closed due to the pandemic and with the supply constraints on special to build up speakers, I'm really pleased with this performance. Our retail partners continue to show their resilience and find 20 ways to service consumers supported by our Sales and marketing initiatives. In the Asia market, we continue to see high demand for home entertainment This was driving demand for our flexible living product, which grew by 7% compared to Q2 last year. This also allowed us to maintain our momentum from Q2 as We received 75% year on year growth in that quarter. In the quarter, we also ran a successful campaign in connection with the Chinese New Year as we pre launched our new headphone, Okay H10 as part of our Chinese New Year's collection. Finally, we've made changes in the management team in Asia in December. We have still been working on onboarding several other We received some professionals with commercial experience within digital technology, marketing and distribution. We expect This will help to realize the growth potential between China and South Korea, both short and long term. We'll come on to the next page. With the launch of the Avon 11 and the 2nd generation of the Avon Genesis 65 inches we have launched 9 products financial year and we plan to launch more inventory products in Q4. With these additions, we have a strong and diverse portfolio Good call, thanks for the future. Beosan Neville is our last executive meeting speaker and the second speaker to be launched When our new product platform first introduced in the Beosan Ballen last year, we are reusing the minority part of the platform from Beosan Ballen, It's underlying the improved product creation and scalability benefits that our new platforms offer. One of our key differentiator is our ability to make special additions in new The Air France with E8 together with Sanron. Sanron has been a plant partner for several years, and we expect this latest collaboration to help us Supply product differentiation, underground range. Finally, as mentioned in the previous slide, the launch of product collection in connection with the Chinese New Year. The range reflects of our core products, as I'm showing here in this case, including our new build phone I will hand over to Bjorn H. Sten. If you move to the next slide. Our recent products have received Very good reviews. Sanddia Fund level is no exception. The product has been placed for its design, sound performance, and not least the introduction brand strengths of dominoesem have always been the indicative of our products. And with this new innovation, our aim is to future proof the technology within all our future home The modular design approach would also enable issue maintenance, service and repair and make us even more relevant to the growing number of consumers looking for more sustainable products. The Loma program 4002 in Q2 as part of the SAVI program underlying the long lifetime of our products Our long dividend will be a key band asset going forward. Moving to the next slide. During the pandemic, in store football has been limited and consumers have to, to a large extent, grow purchases online. We have continuously been strengthening our digital efforts. And in Q3, we further increased the volume of customers For consumer commentations, we've been targeting and media effectiveness. Our efforts are directly translated In our e commerce growth, as we increased our revenues on e commerce by 127%, we were pleased to see The impact of our recent marketing efforts and new campaigns on demand creation. For the holiday season in December, we launched a campaign Share moments without last. This contains future range of products, including the relaunch of the traffic program 4,002. The second campaign, Your Sound, More Space, came to the working from home trend and it was launched for the particularly from a younger female audience. Finally, we have focused on our connected speaker proposition with speaker sets. We have historically not been good enough to explain our Malcom offers to consumers, and the growth from our flexible living category shows that we are getting that message across to consumers much more effectively today. And with that, I would like to turn over to Nicolas, who will take you through the financial developments. Thank you, Christian. And please turn to Page 12. So as Christian said, We have delivered our 3rd consecutive quarter with double digit growth. Our 16% revenue growth in Q3 was driven by product sales. The entire group of 1% in local currencies and was positively impacted by PC sales from HP as component shortages affected car manufacturing. Supply challenges related to component shortages impacted our growth in the quarter, but we still achieved 18% growth in revenue from our product sales. We continue to increase our like for like sellout visibility. You can see that our sellout is in line with our sell in in Q3, So close to 20% like for like sellout growth in the quarter. We're very pleased with this development and show that our sellout is driven our financial performance. We saw double digit growth in all regions with Americas delivering the highest growth of 50% EMEA and Asia both grown 16% in local currencies. We see all key distribution Channels performance, especially driven by multi brand and online channels. As Christian mentioned, multi brand Benefited from the changed operating model in the core markets in Europe, where we have added more resources and new distribution partners. In EMEA, UK and e commerce combined accounted for around 8% of revenue. And in Americas, The digital channels accounted for 40% of revenue. Globally, our e commerce platform grew by 127% compared to last year. Online sales of Coca Cola supported a changed buying behavior during the pandemic, but our growth is also a result of our efforts Drive more online revenue. If you look at our product categories, we see growth driven by those existing and new products. Product launch during the last 12 months accounted for around 28% in product sales. Our flexible living category This played the highest growth rate, maintaining the momentum from Q2 with an increase of 48% compared to Q3 last year. We saw revenue from all flexible living speakers grow and especially GEO PLAY A9 continues to be one of our best selling products. Our stage category grew 13%, driven by televisions, especially the last figures Sales were impacted by supply challenges we are facing. Finally, our On the Go category declined by 1%. The decline was related to our earphones, which last year was supported by sales of end of life products. Excluding end of life products, Our On the Go category displayed a solid growth driven by Bluetooth speakers and headphones, especially dual sound A1, BLP 20 and BLP H95 growth. Please turn to the next page. Q3 was the 2nd quarter in a row with a positive EBIT. EBIT was 28,000,000 A $34,000,000 before special items, which is equivalent to a margin of 4.9%. This was 4.6 percentage points higher than last year. With our performance in Q2 and Q3, we have delivered positive EBIT year to date with a margin of 1.2%. Higher revenue, combined with improved gross margin growth and margin improvement, however, partly offset by higher capacity costs. Special items amounted to $6,000,000 compared to $3,000,000 last year. Special items were mainly related to the cost reduction program. The gross margin improved by 1 percentage point to 44.9%, driven by our products. Brand partnering and other activities impacted gross margin negatively driven by lower margin as well as accounting for a smaller share of gross profit. Our product gross margin improved by 2.3 percentage points to 39.2%. This was driven by our On the Go category, which last year was negatively impacted by sales of interconnect products. The stage category displayed a significant decline in gross margin of 9.3 percentage points. The decline is related to several factors, with the main ones being high logistics and components costs, Impact from Biovis Contour with pass through of screens, retail partner bonuses and product mix shift Towards the Cheetah portfolio intensified by supply constraints and higher margin fuel airspeeders. Half fuel squeeze retail partners related to the launch of Boevision Control and impacts in Q4 also. Otherwise, We have now, with the launch of the original Philips 65 in December, concluded our TV strategy transition where we provide integrated TV solutions So I decoupling from the TV screen itself. Please turn to the next page. Excluding special items, our capacity cost increased by 4% compared to Q3 last year. The increase was Across all cost lines, mainly related to employee bonus provisions. Last year, bonuses were, to a large extent, partially due to our financial performance. The development we see this year, we are provisioning for bonus payments again, which is basically a return to normal. Likewise, it is important to remember that in Q3 last year had already launched our first cost initiatives. We started to reduce cost already from December 'nineteen in parallel with defining our back and back strategy. We are therefore at full run rate with the first cost initiatives. So we're not experiencing the same year on year decline we saw in previous quarters. If we instead compared Q3 to Q2, our overall capacity costs Development costs decreased by DKK4 1,000,000. The decline was related to a combination of lower amortization and higher capitalization. The incurred development cost increased by $16,000,000 mainly related to upcoming and future product launches. Distribution and margin cost increased by DKK 18,000,000 in the quarter. The increase was related to the before mentioned donor provisions as well as higher warranty costs. Last year, we only had marginal effects from COVID-nineteen. So, marketing and travel costs have declined compared to last year. Finally, we are also benefiting from the cost reduction program. Our administration costs were at the same level As last year. However, students, special items and education costs decreased by $1,000,000 This was driven by lower salaries and our cost reduction program, again, partly offset by bonus provisions. Our cost reduction program is progressing well. We booked $42,000,000 in Q3, bringing us to €105,000,000 year to date. With the cost reductions achieved in Q3, our annual run rate is €168,000,000 and $8,000,000 and we are close to our target $175,000,000 The savings realized in Q3 was related to a reorganization made in December where we simplified and consolidated managed support functions and also improved obsolescence cost in supply chain. Please turn to the next page. Free cash flow was positive by DKK8 1,000,000. It's a DKK30 $1,000,000 lower than last year, which was as planned and related to the net working capital development. Our EBITDA was $20,000,000 higher than last year. We have in all three quarters this year delivered a positive EBITDA. Our net working capital was in line with Q2 at DKK247 1,000,000. Compared to Q3 last year, net working capital declined of close to DKK120 1,000,000 reflecting all the work we have done in our managing of the net working capital. CapEx was at the same level as Q3 last year. The investment composition was, however, different And our CapEx is proportionately higher on intangible assets. The investments was related to a product roadmap and continued investments in our platforms. Tangible assets are on the other hand lower than last year, which as we saw in Q2 is related to the lower retail investments due to the pandemic. The increase compared to Q1 and Q2 is related to investments in our factory 5 and store, including new machinery. Our available liquidity was stable and continued at DKK 573,000,000. Please turn to the next page. Since the pandemic outbreak, managing our working capital has been a key priority for us. Our inventories decreased slightly to 3 compared to the first half of the year. Compared to a year ago, we have reduced our inventories with 100,000,000. We maintain a strong focus on managing our production against demand, but inventories are further reduced due to supply constraint. Trade payables decreased by $45,000,000 The decline had to do with the timing of payments to our manufacturing partners. The production ramp up in Q2 was not to be paid until Q3 and decline is therefore as expected. Finally, our trade receivables declined by dollars 26,000,000 driven by phasing of revenue in the quarter and lower revenues. States with extended credit related to in store displacement units In Q3, it accounted 7% of revenue and was also driven by Biovisian Contour, which was launched late in Q2. And with that, I would like to hand it back to Christian. Thanks, Nikolay. Before opening for questions, We'll just basically like to go through the outlook and highlights. So if you go to Page 18, With the 1 quarter left, we maintain our outlook for revenue in EBITDA for special items. However, we have decided to narrow the outlook for free cash So the upper end of the range and now expect free cash flow to be positive up to EUR 100,000,000. Looking at outlook, you can conclude that we expect a more challenged Q4 in terms of results. This is the largest and related to the component situation where we see significantly higher prices. We have therefore amended some of the key assumptions Bruno, I will highlight the main ones here. Our revenue forecast assumes that The effects of COVID-nineteen and component scarcity will not impact the amount from product supply materially different in Q4 than what We experienced in Q4. On licensing income, we expect the worsening for car manufacturing due to the component scarcity. Several car manufacturers had, as you know, shut down production plants. The situation in component scarcity also had an adverse impact on our cost of goods sold. We therefore assume component costs to be higher in Q4 than we have experienced in the 1st 9 months. Finally, the risk costs In both Q2 and Q3, it elevated compared to normal levels, and we don't expect this to change for quarter 4. So if you move to Page 19 and to summarize, our strategy works and it is a result despite The COVID-nineteen challenges we face. We see good progress on setting the execution with high growth rates in all core markets With strong performance across all key distribution channels, especially multi band was positively impacted by the changes we made in the first half of the U. S. We lost 2 products, which have been well received by the market and we continue to see strong demand. Our accelerated efforts with the initiative and e commerce are also progressing very well. Despite all the positive results from our strategy, our Performance was the first impact of price component scarcity, which again have led to product supply challenges. A year ago, liquidity was a critical thing, so it's a pressure that we want to sound This position of R5 23,000,000 after quarter 3. At this point, I would also like to thank all our employees and partners for implementing an amazing job Thank Our first question comes from the line of Benjamin Silverstone from ABG. Please go ahead. Thank you very much. Hi, Christian, Nipla and Christian. Firstly, I hope you're all well and congratulations on the good quarter. I have three questions, if I may. The first one is regards to your undergo segment and the margin, the gross margins in Europe. We do see a very nice development year on year. But you also do mention that the margin has been diluted due to LFI products. Could you give us just a sort of A guidance as to where you are in terms of spacing out as much as possible of the And the 5th quarter negative impacts. So how should we see the undergo margin a year from now? And do you still have some more momentum to gain from further optimizing the outsourcing of enterprise products? Or how should we see this? My same question is regards to online sales. As you also highlighted, we do Very strong growth in this segment and your own online sales. But in total volume, how should we see your own online sales, online direct sales, if I may? And is this becoming quite a significant challenge for B and O in actual volume terms and in revenue terms? And my last question is in regards to e gaming. With your recent launch of the portal product, could you speak a little bit about how your Future outlook is of P and O in the eGaming space. Thank you very much. Yes. Thank you, Benjamin. One of your questions. Maybe I start and then I'll pass on to Nikolay and then to Dirk That's right. That's part of the answer. But if you look at last year and if you look at comparable numbers for The bulk category, we did quite a lot of Enbrelife clearance last year that obviously affects the margins. We also had a much more, I would say, instable Price situation in the market on our on the go products, and we had much more distribution channels and reseller channels that created A lot of price instability. So that has completely changed. That is not the case anymore today. So We have, I would say, balanced supply and demand situation on the go. And we also have Not really, if any product that we believe will come to have to liquidate. So I think that's positive From that point of view, then with the strategy of good, better, best, we also intend to bring The overall category up to more premium, but implementing the better best and therefore also increase Increase the margins. On the line sales, so our online sales, I'll have to look forward to Nikolay as well on specific numbers. But it's what we're doing and what we started to do in terms of driving digital demand That's clearly paid off. I don't think we are where we could be, yes, yet because we are putting more ePay is challenging, guys. And we are putting the partnerships to work with the bigger ePay partners. And of course, that will also help to create awareness about our products, and that will also drive, first of all, even our own e commerce Platform and many of these players, as you know, have a much bigger and wider reach than we would have Alone, so we continue to see good development on our online platform. But also here, as we have Stated before, we do have with many of our 1 of our partners and operating model in place throughout them. So we closed stores where we actually have a revenue share model That is also impacting our margins a bit on the go. And on the e tailwind side, I actually I forgot to write down the question then, you mean, so you have to repeat that one. Okay. It's regarding your e gaming segment, sorry, the launch of the portal product. If you just could speak a little bit about your future Outlook of B and O in the e gaming space. So is this I mean, you already have partnerships with Xbox and AstraZeneca. So how should we think about Where BNO is going to be in terms of e gaming down the road? Thank you. So yes, good. Thank you for So on the e gaming, of course, this is our entry into this space and we're not just going to go in with one partner. We'll continue to expand In the beginning, Hector, I won't be able to give you any more news on that. But it's a strategic segment. It's a fast growing segment. It's a segment where we believe we can add value and we can create different experiences. And we have the feeling The reason in the reception that Porto got, I think the market is clearly ready to By in our proposition. So and also, which I think is amazing that we recognize that you get $6 in one, you get one, you can use some music on, you can work with And then you can actually gain as well. And you only need to have 1 headset going forward. So we expect to broaden that category and continue to work in that category. Yes. So this is Nikolai, and thanks for the questions, Benjamin. So On end of life and on the growth, just to clarify, what we're saying in this announcement is that We have more in the slide in our On the Go segment product category in Q3 last year than what we've had this year. So if you take a look at the On the Grow category and adjust for enterprise products sold In Q3 last year, we actually seen a significant growth this year of 50%, As also stated in the quarterly report. And then so then there's, of course, a question on how In Applied, it's debilitating. And I think, first of all, it's important to note that we will always have in Applied Products. That's the nature of the business and something that we will have going forward as well. But it's also fair to say that especially last year, we had a significant higher amount of inlet light products than what we would ideally have Based on sort of previous years' production of a number of trucks where sales didn't follow, That's the thing that we were clean up in last year as you're all aware of. So we will see impact from in the life products also in the future, But to a lesser extent than what we saw last year. On online sales, just briefly, so Total online sales, ecom, home ecom, e sales, e tailer and other third party online sales is growing At the moment, so in EMEA, it was 8% of revenue, ecom and On e commerce and e tail combined 8% of revenue in the quarter, which was a growth compared to last year. In Americas, it was 40% actually of total revenue in that region that was online driven. And in APAC, especially in China, actually the majority of the sale is online driven because that is actually sold on jdcom.com@tmall. So when we look at Real online sales performance is actually quite significant share of our revenue. Yes. Do you have anything to come? Maybe the only thing to add is that our target segment our focus is how do we serve our customers the best possible way. We see a shift, of course, with our target audience also shifting to online. We're still a retail business. So we are trying to find the balance between online And retail and optimizing that because we know for TVs and our lab speakers that retail experience is still critical for consumers despite And researching online. But to answer your question, Benjamin, on how do we see this moving forward, we definitely see it growing and it is a strategic priority for us. And we do see, as Nikolai pointed to, online sales more broadly than our own e com because consumer behaviors in places like China And U. S. Are very different, you could say, to some of the maybe core European markets that we've seen. So growth and opportunity definitely still in front of us, And we see this as a strategic priority. But where we start is really making sure we serve our target customers the best possible way at their convenience. Thank you very much for question. You've got a question for the answers. And the next question comes from the line of Magnus Yesss from Danske Bank. Please go ahead. Thanks for your time. I have two questions as well. First question is on the comment you made about price increases in March to compensate for, I think, excuse me, I heard it was you haven't been out increasing prices. And if so, can you tell about how much on average? 2nd question on the direct pass through of the panels model you have now. Can you give an indication on how much that has reduced the revenue in the States division if you compare prior to or after That you have done that change in the strategy just to give an indication of how much revenues for us It's moving outside your business. And then on the gross margin, you made a comment on retail partner bonuses. Is that a one off? Or is something we should expect for looking forward as well on the gross margin of this stage? Thank you. Yes. Thank you, Paul. So maybe I'll start with my follow-up question and then I'll pass over to And Nikolay, for our other questions. So the monobrand partner model that they've had and always have had has included Moments to set up for volume base and that is the case this year As well. And obviously, as we're starting to sell more, it has been through the volume brackets in a different way. So we'll continue to have it Also going forward into next year. So but we will probably redo it a little bit compared to this year. That's something we have to come back to. Rafael, I want to make a light for the other questions. Yes. Thank you, Christian. Thank you, Paul, for the questions. So on price increases, What we've done is we increased prices on selected number of products in the States of Flexible Living category. So it's not a general price increase across the board. And those products, The price increases increase actually varies from car to product. But as a rule of thumb, you could even say around 10% Increase in prices of those products. I think the second question was related To revenue on screen sales. And in the quarter, it's around DKK 20,000,000 that is impacting us. But it's actually in this quarter offset more or less by Screen sales on the Contour product where we are passing the Screen through our books as a part of launching this product where screen supply wasn't shorter. So we have to Go in and take some of those screens over our book to ensure we could actually supply for the launch of this product. And then finally, on retail partner bonuses, Is this a one off or not? So this is relating, of course, to the good performance in the Muna brand We see a network where they reach a higher threshold on bonuses. Part of these bonuses is reset every year. Part of it is Based on how they grow from year to year, so there will be a good performance In the Movable Brand channel, in the future also increasing margins, of course, through these 2 oil partners. Okay. Just to be clear about the panels. So if we take out The Contura temporary impact, the change in business model has had an impact of about $20,000,000 on the quarter or Being less than 10% on revenue for the staged. Yes. So that's correct. That's all I can do. And then the final one, on the guidance, So you have a huge spread between highlow here, but you must already have the August numbers. Does that It's not August, March, of course. Does that impact or do you see the impact already hitting in March? So is this something where you have uncertainty versus a shape or a name? So I want to say that we will not comment on the quarter that we have. We are in at the moment other than what I'm saying. The outlook is reflecting the uncertainty that we are facing on several Funds at this point in time, especially on supply and timing of supply is still Subject to very, very low visibility given the global scarcity and competence. That's Just to get an indication if you have already seen that, okay? Yes, but I think we can comment on So I mean, who knows what could happen tomorrow in that market? And then also supply, the risk constraints, I think they have managed it. And like I say, our Sales and our employees and partners have managed it really, really well. But it's getting increasingly difficult It's a priority and it's also unpredictable in many ways. So that's why we maintain the guidance Okay. Thank you. I'll standby. And just as a final reminder, if you do wish to ask a question, please press The next question comes from the line of Milslett from Carnegie. Please go ahead. Yes. Hi. I have 2 or 3 questions as well. So since you don't want to talk about the momentum going into fiscal Q4, could you talk about your current order backlog compared with the end of the previous Quarter. Secondly, amortizations Went down quite a lot in this quarter. How should you think about amortization going into quarter 4? And then thirdly, you have a net cash position Of more than DKK 500,000,000. Still, you obtained a new loan in this quarter. Why did you do that? And I mean, how are you thinking about this cash position that you're building? Thank you. Thanks, Neils. Nicolas, maybe you start. Yes. So on the order backlog, we went into Q3 with higher than normal order backlog, and we're also going into Q4 With a higher than normal order backlog. So it is A special situation from an order backlog perspective, giving supply and giving longer lead times So from our manufacturing partners, resulting in orders not being able to be fulfilled as fast As we normally have done. So in that perspective, you can say we are on par And actually a little bit better with a higher order backlog going to Q4 than we did in Q3. I didn't really catch your second question. So let me just go through the split one on net cash and the loan. We did a couple of quarters ago, especially after the rights issue, Decided that we had to place the extra liquidity we got In some Danish mortgage funds to make sure we wouldn't have to stand in a bank account with the negative interest rates. So we have a significant amount of mortgage funds forward. And in order to manage the day to day The liquidity, we then went to what's called a repo arrangement with our bank, Allowing us to draw on liquidity when needed. But due to the interest rate environment in Denmark at the moment, when we are making moves at the Beggen facility, we're actually getting paid an interest rate to deal At the moment. So there's a temporary high draw on that facility In the quarter? But it's only part of day to day liquidity management. It's not really a Traditional loan agreement, just to make that clear. Okay, great. So my second question was About your amortizations and depreciations, so we saw Total depreciation and amortization is going down to €35,000,000 in this quarter, down from close to €50,000,000 in the previous quarters. And I guess that most of this decline is explained by lower amortizations. How should we think about this line going into the next quarter? Yes. So in general, we've had a long period of time with amortizations Declining as we've been sort of gradually riding off some of the major sort of specialty platform investments that have been done in the past. And I think we should Start to expect to see this level stabilize and also in some instances starting to increase a little bit again based on our It could. Development costs starting to increase again as well. So I think that's a specific as I will see at this point in time. So you would expect depreciation and amortizations to be higher than DKK35,000,000 in the quarter next quarter? Yes. That's a different direction it will take over time. And I think the turning point is Spark revenue. So we didn't make that assumption here. Great. And then just a final clarification about the sell through of flat panels. Did you mention that the sell through has been ended or would it continue into the Q4? The search will continue also in the Q4. So we bought a rather large quantity of screens from LG when we launched the product In order to secure supply to the markets, we're selling that screen through basically fewer margin. And we have still some incremental inventory for Q4 as well. We should expect the same effect in Q4? Yes. We should expect this to have a normal impact in Q4 as well. Okay. Thank you. And as there are no further questions, I'll hand it back for any closing remarks. So thank you very much everybody for joining today's call. And we appreciate your interest in us. And As always, we're looking forward to meeting you next quarter again. So I wish you It's a good end of the week. And if you have any further questions, please go back to Martin on our IR department. So thank you very much for joining. Have a good day. This concludes our conference call. Thank you all for attending. You may now disconnect your lines.