Earnings Call: Q1 2019

May 14, 2019

Welcome and thank you for joining the Q1 2019 Earnings Call. At this time, all participant lines are placed on listen only mode until the question and answer session of today's call. As a reminder, today's call will be recorded. If you have any objections, you may disconnect at this point. Now I'll turn the meeting over to your host, Mr. Christian Ronaldo, COO, Agfa, Advert. You may begin. Thank you, Herbert. Good morning, everyone. With Ben in the room here, we have Stephane Zannoura, Philippe Paz, Luc Delagay, Jacques Demain, our CFO and Guillaume Liquez our Investor Relationships. We're going to comment the Q1 results of 2019. As you may have seen on the website, we have several things to explain in this call, which is going to be different from what we have normally presented before. Of course, the content will be the same. It's still the results of the company, But the format of the slide is different. The format of the organization is different. The IFRS standards are different. So I'm going to try to make your life easy and have restated all the numbers. So normally, you will do a fair comparison between the quarter 1 of last year and the quarter 1 of this year, both in terms of IFRS standards and in terms of secure the organization. Let me first now address the two key things of this quarter. 1, in terms of transformation process. I explained pretty in-depth last quarter that we have done in 2018 a lot of things which are transforming the company. I think I was pretty clear saying that there are 2 elements of this strategy, which are critical this year in terms of execution. The first one is the progress and the implementation of the alliance with Lucky in the Offset division. And the second one is, of course, a decision on the sale of our IT business. So back to Lucky, I think we can say now that we have finalized the creation of our common sales platform, which is a joint venture between Lucky and Agfa. And we have fully defined the way we will conduct our business on the Chinese market. In parallel of that, as you know, there is an element of concern of technology and manufacturing, which is progressing well. And as I said already in August last year when we signed the agreement, there will be a component over time of reflection between Lucky and Agfa by the way we extend our alliance in terms of technology, manufacturing and go to market. And this is progressing well as well. And in the meantime, we have taken several initiatives to improve our position in Offset in the emerging markets. Emerging Markets being, of course, the main concern, and you will see that in the numbers of the evolution of the Offset business because most of the business is now moving pretty fast to these kind of countries. The growth is there, while it is not growing in the mature markets. And in this energy market, the prices are very sensitive to say the least, and the importance of this alliance with Lucky. The second significant project of transformation is, of course, the decision on the sale of the IT. And we had a board meeting yesterday, which was a third thing. And we have decided that we're going to investigate in that the sale of a part of Agfa HealthCare. That means we are not going to sell the entire IT business of Agfa. And this part of which will be foreseen is expected to basically be a hospital IT and the Integrated Care business, but also the Imaging IT business to the extent it is connected to the hospital systems. And this is mainly the case in the DACH region, Germany, Austria, Switzerland, but it is also the case in France and Brazil. So basically, this HEIS business, as you know, is a business which has been developed in these 3 regions, Brazil, France and DACH. And in these regions, the Imaging IT business, which is largely associated to the development of the EMR, will be part of the perimeter of the transaction we investigate. Moving to the next slide, the new division of structure and IFRS. So I was pretty clear last quarter that we have decided to create 2 entities, Agfa and Agfa Health Care. Agfa Health Care is the former IT business and Agfa is the rest of the activity, basically the formographics, the form of specialty and the emerging part of the form of health care. In total, there will be therefore 4 divisions, which is very important. 1, which is the offset, so corresponding to the former perimeter of the prepress business of Graphics. The second one is the radiology, which is the perimeter of the form of imaging. The third one that we call Digital Print and Chemicals, which is the aggregation of the former specialty product and the inkjet business of graphics and finally, the IT business and Health Care. We have also decided to for transparency reasons to isolate a certain number of purely corporate costs and to create a sort of 5th division that we call corporate services, which are in fact the costs associated to running the corporation, which have no direct impact on the businesses. So that's the Investor Relations, that the Corporate Finance, but really the Corporate Finance, we're not talking here about the controlling of the businesses. This is the internal audit. This is the newly created Innovation Office. So there are you will see here EUR 5,000,000 in the quarter of cost that we stated compared to last year to make sure that you have a fair comparison of the results. Moving to the next slide. There is the change of IFRS standards on top of the divisional structure. So you may know, if you don't know, I tell you that IFRS 16 is dealing with the leases of the company, in particular, the leases of buildings, but also the leases on different things like the cars or whatever. This IFRS standard has different angles in terms of impact on the accounting of the company. Balance sheet wise, the right of use of these assets and the lease liabilities are recognized now on the balance sheet. In the P and L, in the EBIT, we have the operating lease expenses, which have been replaced by the depreciation of the right of use. In fact, if you have EUR 100,000,000 of right of use and you depreciate 10% of that, EUR 10,000,000 which are flowing into the EBIT. And the interest of lease liabilities is accounted in the financing expenses. In terms of cash flow, the payment of the operating leases are now recognized in the net cash from financing activities instead of operating activities. I'm sure that you will have questions and I'm sure that Dirk will be very happy to answer the questions about this number. For me, as CEO, there is different levels of impact. The first one is that on the balance sheet, we have an impact on the assets and liabilities of EUR 127 million due to the right of use and the lease liabilities. On the P and L, basically no impact on the EBIT, no impact major on the net result, but significant impact on the EBITDA because of the depreciation increase, which is about €40,000,000 in the full year and you will see €10,000,000 in this quarter. And finally, on the cash flow, there is no effect on the total amount of cash flow as reported. But there is an effect, of course, on our debt, as you will see, because we report in the liabilities all the different elements I just mentioned. Moving to the sales of the group now on the next page, Page 5. So you see for the first time the pie chart cut in a different way. So in red on this chart for 37%, you have the Offset division, which is the biggest division of the group. Then going down by size, you have the Healthcare IT business in yellow, which is 23% of the revenues of the quarter. Then you have the radiology business for 21% in blue. And finally, the DPC in green for 19%. Total sales, a bit above €500,000,000 in the quarter. Moving to the Slide 6, the traditional table of P and L above EBIT. So top line decline of 1.9%, but excluding currency exchange rates, which are positive this year for Agfa, minus 3.3%. Of course, this takes into account an amount of about EUR 10,000,000, which has been the decision to stop the reseller activity in the U. S. So excluding this decision, the top line would have been rather flat, of course, with different elements, including the currency, including the impact of the acquisition of Ipaxa. But the top line, which is starting to improve a little bit compared to the trends of the previous quarters. The other thing I would like to say on the top line is that this top line evolution is driven, of course, by the Offset division, which is, as I was explaining, struggling with different things like the mix of original mix and the war on prices in the emerging markets. And the good news, if I may say so, is that the decline of the top line is coming only from the SoftBank division this quarter. And the other good news is that it reinforces the fact that we believe the decision to make an alliance with Lucky and to execute this alliance very well was a good decision to take, a timely decision. There will be more and more complexity of this market for players which are not going to be able to address the cost issue in the right way. The gross profit of the company stays flat. Mixed bag here also, of course, we have a negative impact of raw materials in the quarter. We have negative impact, of course, of the shift in Graphics. We will see that later towards the energy markets, but positive impact of improvement on gross margin in Radiology and IT. SG and A, 22.7%. I just repeat what I said several times now in the last quarters, with the top line, which is declining and the efforts we have done in the past years to structure our operations in an efficient way. We have more and more difficulties to find new ways to reduce the cost. You see that the costs are basically constant. If you take into account here that some of the costs are in countries where the currency are stronger, There is a negative impact of the currencies. But overall, we have an impact of the G and A percentage to sales, which is going in the wrong direction, and we have plans to address this issue in the remaining part of the year. The research and development is constant at EUR 37,000,000 in the quarter. And the adjusted EBITDA by the way, adjusted EBITDA, this is what we were calling recurring EBITDA in the past. The perimeter is the same, but the wording is more in line with the standard, and we have decided to move to adjusted EBITDA. So the adjusted EBITDA, excluding the IFRS 16 impact is EUR 33,000,000, which is comparable to the EUR 37,000,000 of last year Q1. If you include the so called EUR 10,000,000 of impact of IFRS 16, you see in the footnotes on the left hand side that the EBITDA will be publicly reported at €43,000,000 Moving to the numbers below EBIT on Page 7. The restructuring and nonrecurring are the same level as last year, EUR 4,000,000. By the way, this is a number which is still small in the quarter, but for the rest of the year, we have significant programs of restructuring. Therefore, we will be probably above the average guidance of EUR 30,000,000 that we give normally. So it will be maybe more comparable to what we did last year. The non operating results at minus 11% compared to minus 10%. Of course, there is an element of extra cost of financing because of the debt level. And the taxes are €8,000,000 negative compared to 3 last year. There is here an element of taxes we paid because of the reorganization of the group and some transfers of legal units and these kind of things. And of course, because of this increase of taxes, the debt result is slightly negative at €9,300,000,000 as opposed to the plus €7,000,000 of last year. On Page 8, the traditional slides on the main drivers. So I will not repeat too much, but elements of satisfaction, the inkjet, in particular, the high range of the JetEye machines, which is performing well as well as the ink. Element of satisfaction, the fact that we are now getting out of the trap we were in China with our hardcopy film. So the transformation we have operated in the last 2 years is paying off, both in terms of margin, but also in terms of recovery of volumes. So that's good news. And finally, our Healthcare IT division is performing according to our expectations. That means growing in the SGIS business and improving in the IITS business, and the rest have been commented. On Slide 9, you see the picture of the evolution of our debt, net financial debt. In blue, you see the things which are comparable. And in red, the EUR 118,000,000 which are the impact of the IFRS 16. So the debt as reported is EUR 255,000,000 but comparable to last year, it's EUR137,000,000 showing a slight improvement in the Q1, in spite of the seasonality, which is not favorable to the debt reduction. On Page 10, you see the working capital showing an improvement compared to the rest at the end of the year 2018 of EUR 6,000,000, but not improving in terms of percentage of sales, still at 29%. And the point of concern on this slide is the inventory level, which is now expanded to 128 days of inventory on hand. We have started to rebuild a program of hunting the extra inventories. Part of these extra inventories are due to the transformation of the business, I explained that. The Chinese hardcopy film, of course, now we have to bear inventories where before they were transferred very early in the process to the first line of distributors. We have also because of the taxes and the tariffs and the battle between the Chinese and the U. S. Presidents, we have some supply chain issues to organize in the way we transfer the plates in the Offset division, and this has also the cost in terms of inventory. But at the end of the day, I think we have to re improve our efficiency in this domain, and I will report on that quarter after quarter, hopefully seeing some improvement. The receivables and the payables are evolving correctly. Slide 11, you see the so called Corporate Services. So this is just a slide to state the numbers in terms of EBITDA in the quarter 1 of 2019, excluding IFRS 16, we report minus €4,800,000 By the way, it would have been the same, including IFRS 16, while last year, the equivalent perimeter would have been EUR 3,700,000. Last year, we didn't have yet the innovation of this in place. And we really want to invest in our future of capability to innovate and to anticipate the major trends on the market, big technology. I'm talking here about technologies in our own domains, but also the technologies like artificial intelligence, like Internet of Things, like the blockchain and these kind of things where the companies in general terms and Agfa in particular will have to reflect on the impact of these technologies on the evolution of our businesses. So EUR 48,000,000 are costs that we spent at the corporate level, which have no impact direct on the profitability of the businesses. Moving to the 4 divisions now, starting with Offset. You see on Page 13, the split of the business between the digital computer to plate and the analog computer to film, and the analog is 12%. It's reasonably well because the film business, to some extent, will benefit from the fact that we are, if not the last one, at least the biggest one standing in this domain of offset film solutions. But of course, the vast majority is related to the digital plates. It's right on this slide. Slide 14, the P and L of the Offset division shows a decline of 7.4% of top line and even 9.6 percent if you exclude the currency effects, which are positive. As I said, we need mentally to remove something like 5%, which is related to the decision to drop the return on activity last year. So in fact, including the positive effect of the currency and everything, the top line decline would have been only 2.6%. But this is obviously a bit artificial because at the end of the day, we shouldn't hide that we continue together with our competitors because if you read the reports of our competitors in their Q1, we all struggle with the evolution of this market. The gross profit by 3 points lower than last year obviously suffers from the cost of aluminum, which is because of our strategy of hedging, carrying today higher costs compared to the equivalent quarter of last year. But also, as I said, suffering from the mix, regional mix in particular of our sales. SG and A, 1% more than last year, 21.6 percent, even if the number is lower. But compared to sales, with a decline of 7% of sales, it's difficult to keep the ratio constant. And I was saying a few minutes ago that we have a plan to work on this issue this year. And I must say that Stefano Lund in the Offset division are at the front line of this cost reduction. So this is where we have to get our cost the most because the top line is declining. Research and Development, we try to keep constant in the efforts because we still have significant developments to adapt the plate strategy of Agfa to the new trends in the market. So in terms of cost, in terms of software ability to deliver to our customers efficient total cost of ownership and of course, evolution of plates technology. And EBITDA is at €1,200,000,000 0.6 percent of sales. Including IFRS 16, it would have been €3,900,000 but compared to last year, it's a reduction of EUR 10,000,000 of EBITDA from EUR 11,900,000 to EUR 1,200,000,000. On Page 15, the drivers behind these numbers. I think I commented most of it. Let me just highlight on the business. We have organized for the first time what we call the value conference at Agfa. The idea is to show our customers that the plates are, of course, an important element of their technology and their business, but Agfa has more than plates to offer. And we have what we call the Eco Free solution, which is enabling the customers to have a total cost ownership approach, which is different. We have fantastic software to save in consumption to improve the workflow. We have also plates, which are very ecology friendly. And we have overall a system of maintenance and services, which is helping them a lot. So this conference was held in Agfa. And as I said, we were very happy with the success and the wake up call it was on some of our customers. The next one is about significant UK customer, which has now refurbished a new factory after the first three ones in the UK in Southampton. I would move now to the Page 17 in the Digital Print and Chemicals. So as I said, the Digital Print and Chemicals is the sum of the former Specialty Group and Inkjet. The reason why we have associated these two businesses is because we have in the few domains a sort of commonality of DNA, in particular, in research, in the IP. The recent move we have done in the inks, for example, the success we had with ZQEC in terms of low migration inks for packaging UV inks shows that these two parts of the business are strongly connected and correlated, in particular, in the upstream part of R and D and development. This operation of carve out of the inkjet from graphics has also allowed us to identify a better the cost structure of the 2 businesses. InJet is now more standalone and therefore it brings more costs to support because the business is not protected by the grandfather of Offset in the Graphics Group. It helps also to clarify and add some transparencies to our sector. And finally, we believe that in particular in the industrial development of the inkjet, we will find more and more commonalities and synergies in the field of inks between the former specialty group and the inkjet business unit. So you see InJet is almost half of the new division, 39% is related to the film and foils and 18 14% in blue is related to the electronics in general, PCB and electronics inks and Hongakon in particular. The P and L on Slide 18 shows a good performance of this division, the top line increasing by 6%, 3.2% excluding currency exchange rates, where here the currency exchange rates are a negative impact. The gross margin going in the right direction at 28 percent, the cost being well under control. The R and D, the same. And the adjusted EBITDA, it's close to 10%, which would have been even more than EUR 10,000,000 in the IFRS 16 including IFRS 16. So sort of a model of what Agfa should be if we were able to clone this digital print and chemicals activity. Good news, the Jetai the big Jetai machine, the 3.3 meter on Slide 19 is progressing well. It's well accepted by the market. I think I said that already in the previous quarter. Good news also is that our growing businesses in the former specialty being Synapse, Hongakon, Security performed very well in the quarter 1. And other good news that we have secured a new distributor for our Synapse business, which was so far working a lot from a distributor in the U. S. Now we have an equivalent distributor for the Japanese market, which is another big market in the domain of synthetic paper. So that's the good news of the Q1 for the VPC division. Moving to Radiology on Slide 21. You see the split. You can deduct from the previous presentations basically these kind of things. So hardcopy is at 58% of the division, the biggest business unit. The CRBR, regulatory equipment at 35% on the top line and the classic films at 7% on this division top line. On Slide 22, the P and L. You see the top line basically flattish, which is a good news because it was declining. The gross profit is improving 2% more. And this is, of course, largely due to the fact that we have recovered in the Chinese market and that we start to harvest the fruits of this transformation. The SG and A have increased, but part of that is obviously due to the fact that we have equipped our business with the sales force in China to replace the DC meters that we have removed. So there is a sort of transfer of cost from the SG and A into the gross margin. But going forward, the model is to continue to grow and to recover as part of the volumes we have lost in the last 2 years of transformation. And therefore, this evolution should continue to be a positive evolution. The R and D is constant €5,000,000 in the quarter and the adjusted EBITDA goes back to levels which are more decent of close to 13%. On the top line. Slide 23, a few comments. The numbers have been commented on the business highlights. We had a good acceptance of the new Doctor 800 machines, which is a pretty big Doctor, including fluoroscopy, dynamic imaging. This product has received the work from Frost and Sullivan about being the global new product innovation award. So that's significant in the context where it's not easy for a new color like aircraft to get some awards in a very crowded market. And the Doctor business is starting to show up some improvements in the order intake, in particular, in Europe and the U. S, where a few significant contracts have been signed in the UK, in Poland, in particular. Moving to Healthcare IT, a pie chart on Slide 25. You see the IITS business in blue and the HCIS business in red, 40% for HCIS, 60% for IITS. The P and L on Slide 26 shows flattish top line, which is contrasted between the HCIS business, which is growing steadily and the IITS business, which unfortunately has to be compared to Q1 last year, which was pretty strong. So but it's a bit distorted. We have good news on the front of IITS. I mean, the program that we have developed that Libtas is conducting in terms of refocusing the business, eliminating some markets where the business is too small and the profitability is too limited, improves the gross margin. Of course, it's way on the top line, but it has a total benefit impact on the P and L. The other good news that the order book is being rebuilt and the confidence is coming back in our platform, in particular in the U. S. The rest of the business outside of the U. S. Is performing well. So I mean, the confidence in the platform, in the stability of the platform, in the trust of customers and the future evolution positive evolution of this business is restored. The margin is improving, in particular, for all the efforts that I was explaining, including the service efficiency of this business, which is clearly recovering. The SG and A is constant to sales and EBITDA is close to 10%. It would have been a bit higher at EUR 15,600,000 including the IFRS 16, and it compares well to the EBITDA of last year. I'm expecting this division to show improvements in the quarters to come, in particular, because we are more and more confident that our ITS business is on the path of recovery after 2 difficult years. On the business highlights on Page 27, just one contract we want to highlight, which is a multiyear Imaging IT collaboration with the Northwest Ziekenhuis group in Netherlands, significant business. And it's a market which is critical for us because this is a very competitive market, the Netherlands, and we are happy to have a positive reception of our emerging IT platform. And of course, you may know that there is now a clear evolution positive evolution of the infrastructure for Telematics in Germany. We are not the most the biggest company in terms of benefits of this infrastructure. Of course, we are not building the infrastructure, but we have to connect our customers to this infrastructure. And this is generating a significant amount of growth, in particular, in the years to come. So that's a business in which we are obviously well positioned to participate into because of the huge installed base that we have in the hospitals in Germany. So that is a nutshell in the quarter 1. So to summarize, 2 important things. 1, positive evolution of the work with Latv and finalization of our joint venture in China 2, decision of the Board to investigate now in-depth the sale of the part of the IT business In terms of operations, satisfactions on the side of InJet, in particular, the large tower machine, satisfaction in the field of the Foam Grow Specialty Group satisfaction in the field of the HCIS business in IT satisfaction in the field of recovery in China on the hardcopy field and I would say a point of concern, which is being addressed with the alliance with Lucky, which is the offset evolution of the business. Thank you. And now we can open the floor for questions. Thank you. Our first question comes from the line of Stefangelo. Your line is open. Yes, good morning. Degroof Petercam. First question, you're indicating that for the sale of the Healthcare IT business, it would be Healthcare IT and in the DACH region, including imaging business. Is this because the potential buyer indicated to be interested in this party? Or is it just because you feel it's too much integrated anyway in these regions? So that's the latter. It's clear that in the example of DACH in Germany is the best example. In fact, if you see the emerging IT in DACH, the so called EE platform, it's a sort of extension of all this. And therefore, it's almost impossible, even if we can sell it as such, it's impossible to carry it out in a clever manner. The businesses are intimately together. By the way, it was like that when we acquired the business 12 years ago. And we believe it makes full sense, not only for Agfa in terms of entanglement, but for our customers more importantly and probably for the future buyers to keep that together. Does it also imply that you will remain a supplier for renewal of these businesses than the Imaging businesses? Yes, it will be up to the new company, let's say, to decide. But I believe that there will be an evolution, of course, which is anticipated in our future plans, of course, in terms of cost to maintain this platform and to develop it. But Stefan, for example, you have the cardiology module, which is on this module. You have the rates module, which is in office space. And this is embedded in this platform. So I mean, obviously, without this, it's almost impossible to carry that. Okay. Okay. You will not so you will sell the combined Health Care IT with the Imaging business in the Dutch region, Brazil and France. I can imagine that the Germany has got much more higher margin within that breakdown from slower margins. I don't know Brazil, probably somewhere in between. Can you give us some more view of what part of total sales you are looking for to divest on top of the Healthcare IT, which parts from the Imaging IT business will also go out? And how will the total margin of the business you will divest compared to the current Healthcare IT margin? So on the top line, I would say, basically after the full carve out that we are still working on it, you will have roughly half of the IT division, which will be part of the perimeter within the cell in terms of top line. You see on the pie chart, 40% is AGS, 60% is the AGS. So you will have 10% other than 60% roughly, which will come to the perimeter for sale. In terms of profitability, in due course, we will give in the due diligence everything that people will need to make a good offer. So at that time, you will probably know more about the results. Yes. But given that it is a mix, it is going to be materially different from the current high care IT margin you report? Or given that the radiology is also around or yes, given that the other margins are also similar, is it will it be far away from the current average? That will be communicated in the due diligence. Okay. And then what I said before, in case you've just forgot it, The HCIS business in particular, DACH is very close to what our peers are doing because it's a business that we have well developed and which has a strong position. HCIS in France is getting in the better position. And the IITS has suffered in the U. S. From the last 2 years. So I mean, then you can elaborate your model. And in the due diligence, everybody will be very clear about the numbers. Okay. Okay. And then final question. Will part of the corporate overheads that have now been separated in the Corporate Services be reallocated to the divested business? No. Again, this is something we are doing. We are working on that. This corporate cost, I believe, for the entirety will not be reallocated to the business because they are really corporate cost. And for the rest, there might be maybe a few other costs, which are maybe not needed, which are part of the structure of the IT business. But that's the exercise we are currently doing. We got the green light of the board yesterday, so you can understand that we are not fully ready to answer yet these kind of questions. Okay. Thank you. Thank you. Thank you. Our next question comes from the line of Guy. Your line is open. Hi, this is Guy Cich, KBC Securities. I have two questions. So first is on the Healthcare IT. So you will sell out of this EUR 122,000,000 40% from HEIS and then 10% out of the 60% that we see in the slides was totally, it will be roughly half of that. That's correct. Am I correct in that? And second question is related also to that. How are the margins over the year for this Healthcare IT division? Is that, I presume Q4 will be much stronger than the first two quarters, but can you give us some bullet point numbers how we can see that? And the second question is related to the guidance you are giving on the restructuring costs. So you were first guiding for €25,000,000 to €30,000,000 and now it will be more in line with 2018, which was €66,000,000 So where is this difference? And where will that be allocated to? Thank you. Yes. So on the profitability of the IT, I think I gave all the answers I could give to Stephane. So if you have heard it, there is nothing more I can add. And there is a pattern, of course, quarter after quarter. There is a pattern in the quarter of the last month. But at the end of the day, we will become clear not only on the IT, but also on the perimeter when we in July. On the restructuring, you understand from the cost structure that we need to continue to do it for ourselves. So we have launched a few things, not a few or a lot of things. We are in the process of starting the implementation. This is dealing with the international structure, not only, of course, in Europe or Belgium, but also in the U. S, to some extent, in Latin America. There will be a significant amount of restructuring to provision. It's still difficult to have to give you a clear number. There are other costs which are going to come from the transformation we are doing, but my expectation is that we may end up between EUR 50,000,000 EUR 60,000,000. Okay. Thank you. Okay. Thank you. Our next question comes from the line of Sandra. Your line is open. Hi, Maxime Svanard, ING speaking. So I had a first question regarding the plan to decrease SG and A. Can you give me more like insights of what may be the impact of such a plan? And I had another question regarding the sale of the IT Healthcare business. To what extent should we expect that you will use the proceeds that you will receive from such a sale? Thank you. Okay. So the plan on SG and A, it's not only SG and A, it's an effort on all the lines of cost. You see that we have gross margin also, which is reducing in offset. So we are working on all fronts. So that's purchasing, that's our supply chain, that's our G and A and our selling activity, the service also. In total, the ambition is for SG and A to come back to the levels that we have been targeting, so at least to stop the evolution the negative evolution of the ratio to sales. I think in the next quarter, I will maybe be a little bit more explicit about the results. First of all, we will see in Q2, hopefully, some elements of success already on this plan. And I will try to give some colors on that, but difficulties to qualify a number at this stage. But if we could say the range of 1% of our sales, that would be a good number. Your second question was about the proceeds, yes. So it's far too early, the proceeds, because it's clear that there will be a debate on the proceeds. The question, I think, will be raised at the time we get closer to the finalization of the process. It's also very clear that there will be different stakeholders in the participation to the way we can use the proceeds. Without giving a lot of secrets, the shareholders probably will ask for some dividends. The business needs cash to invest, and this is the rationale behind this transformation of the group that I explained already in 2017. The group has been suffering in the past 10 years from the fact that we have split the business without injecting any cash in this company. So the balance sheet is weak. We have a huge liability of pension. Therefore, if we want to give more flexibility, we need not only to simplify the structure of the group, but also to give the group some capabilities to develop organically and externally. And then there will be, of course, stakeholders, which will be the time to fund, which are probably going to say, if guys you have cash, maybe it's time to accelerate a little bit the refunding of the gaps. So this will be discussed at the board. This will be discussed with the different stakeholders in due time. We are going to make extensive efforts as management this year to clarify the strategy and to identify targets for growth in the future years to come. It's clear that my intention and the intention of the management is to create value in the same order of magnitude of the value we lose by selling the business and not proposing to the shareholders to reinvest good money into lousy businesses. But it's too early to say more about this kind of stuff. You may see that we invest already in the reorganization of the Offset division. Of course, we pre invest some of this amount of money in the restructuring of Offset. I mentioned in the past minutes that I believe that our Doctor business, our engine business and our ITS business have to be developed. So that would be the piece for to be exploited in the next quarters. Okay, perfect. Thank you. Thank you. Okay. We have no further questions over the phone. You may proceed. Okay. But I think it's not a surprise because the 3 analysts have asked their questions. I think we can propose to close the call and leave appointment to everyone in August for the results of our quarter 2. Thank you. Thank you. And that concludes today's conference call. Thank you all for joining. You may now