Earnings Call: Q1 2021

Apr 8, 2021

The conference is now being recorded. Welcome to the conference call regarding the publication of Geraheimer AG's Q1 Results 20 21. At the moment, all participants have been placed on a listen only mode. The floor will be open for questions following the presentation. Now I hand over to Ms. Carolyn Nadenhor, Head of Investor Relations at Gerezheimer AG. Welcome, everybody, and thank you for joining us today to review our first quarter results. With me today are Dietmar Simson, our CEO and Doctor. Brent Metzner, our CFO. As we did in the past, we are presenting a set of slides accompanying the Before we start, I have to remind you that the presentations and discussions are conducted subject to the disclaimer. We will not read the disclaimer, but propose taking it as read into the records for the purpose of this call. As usual, we start with a presentation by Dietmar Simson and to Brandt Metzener. And after that, we are open for your questions. And now it's my pleasure to turn the call over to Dietmar. Thank you. Yes. Thank you, Carolyn. Good afternoon, ladies and gentlemen. Good morning to those Joining us from overseas, and welcome to our Q1 conference call. I'm pleased to have you on this call today, and I hope everybody is healthy, and I also hope Stay. It remains like this. Stay healthy. The world is still facing COVID-nineteen unchanged. We are successful in managing our worldwide production footprint, ensuring deliveries and shipments to our customers worldwide. The Gennesheimer team Is managing this extraordinary situation in an impressive way. The transformation we spoke about several times It's now more than a plan and it's materializing. The results become visible and are further motivating the team. Change and the right mindset for growth have taken root in the company, and we are achieving our targets together as 1 Garesheimer. With a pretty good start into the financial year 2021, we underlined the 2021. Our core business, comprising the divisions Plastic and Devices and Primary Packaging Glass, The ongoing lockdowns are still affecting parts of our business, but we have been able to compensate these headwinds With a good operational performance in other businesses, for example, with COVID-nineteen vials or further shipments of high value products. Our high value solutions will be one of the key growth drivers From 2021 onwards, the Q1 has shown solid growth of more than 40% plus year over year, And this trend will sustain. I will come to this in a minute. The adjusted EBITDA margin in our core business achieved 19%, an increase of roughly 80 basis points compared to the Q1 2020. The organic Adjusted earnings per share have increased by 29.3 percent resulting in now 0 point 5 Yes. We are on good track and the Q2 will be even stronger. The order books are feeling well. We are clearly benefiting from our strategic new positioning with increased focus on customer centricity, excellence, cost Innovations and not to forget our very strong positioning in sustainability targets. We are looking into a solid first half year and confirm our full year guidance as well. The positive effects of 1 Garesheimer is the key for our long term success. We have formed A global joint team for Gannesheimer. Together, we are on a mission for sustainable profitable growth. We are serving our customers alongside their whole product life cycles by connecting our competencies Globally, our global key account management knows exactly the needs of our customers. We are becoming the go to partner for Pharma and Healthcare. Our success, for example, in GX Biological Solutions underlines The consequent implementation of our strategy Formula G sets the foundation Advanced technologies will be a key driver of our future growth. In our digital hub, We are developing smart, intelligent and connected devices to serve the global megatrends in Pharma and Health We are convinced that with our future smart devices, we can significantly contribute To the core challenges of the pharma and healthcare industry, like the demand of smart and simple self medication devices or the challenges of rising healthcare costs in general. Now I would like to highlight the performance of our high value solutions. High value solutions include products as ready to fill syringes and vials or EliteGlass and further innovative product solutions. Our high value solutions are an important growth driver for the fiscal year 2021 and beyond. With an increase of more than 40%, also clearly driven by a very strong customer response in our Biological Solutions segment, we We did a major step forward. GIG's biological solution acts completely cross BU and cross divisional. We are serving biotech customers with the whole Gannesheimer portfolio and operate as a full service provider for small, mid And also large biotech companies. In this segment, it is essential to offer a broad product portfolio as well as services, like for example, laboratory testing, stability testing and Regulatory support. Globally, with our broad know how, global footprint and The experienced technical experts, we are the right partner for our customers. And The implemented strategy pays off. We showed an increase of 50% and even more in Biologics compared to Q1 2020. This actually was a kick start into the year for Biologics, clearly outperforming the underlying market growth. We are on a good path and accept continuous attractive growth rates within this business in the next years. Our global network of technical innovation centers serves the following purpose. We have to concentrate our competences, the experts and the necessary equipment to be efficient. At the same time, we have to ensure global availability of this expertise to our R and D centers, to customers and also to our plants. The success of our Network and the newly installed technical innovation centers is obvious. That's why we continuously expand this network. To the existing centers like, for example, the smart device center in Alton, Swiss Or the center in Wackerstorf for medical systems and process intelligence or Bunde for syringes, we added A new glass innovation technology center in Vineland that was in 2019 in the U. S. And Just recently decided to build up a new competence center for molded class in Loa. And we are planning further competence in innovation centers in Asia like India and China. With this, I hand over to Bernd for the financial details. Thank you, Dietmar, and welcome everybody also from my side. Before we go into the analysis of our Q1 2021 figures, I want to briefly highlight 5 aspects. First, the organic growth in our core business of 3.1% is already within the full year 2021 sales guidance range. And we achieved this despite the ongoing headwinds in our molded glass cosmetic business due to the persistent COVID-nineteen lockdown. 2nd, very important, sales were particularly boosted by our key growth drivers, high value solutions. 3rd, we achieved strong EBITDA margin expansion in our core business and for the group despite The furnace construction in primary packaging glass, which hurt us temporarily by €5,000,000 in Q1. 4th, our adjusted EPS increased FX adjusted by 29% year over year. 5th, And we showed a significant better free cash flow than a year ago despite higher CapEx. To sum it up, we had a good start into the year and, more important, the positive momentum Now let's dive into the analysis of the key financials for Q1 2021. Reported revenues in Q1 2021 came in at €303,000,000 which was on par to last year's quarter. Adjusted for FX effects, we achieved organic revenue growth of 3.1% year over year in our core business. This is a strong achievement in light of headwinds from the ongoing lockdown, especially in our molded glass cosmetics business. These headwinds amounted to around €4,000,000 Both divisions, Plastics and Devices as well as Primary Packaging Glass achieved good revenues growth rates in Q1. Let's Let's turn to earnings. We managed to increase the adjusted EBITDA from €51,000,000 in Q1 2020 to €54,000,000 As a result, the adjusted EBITDA margin surged by 110 basis points to 17.9% compared to a year ago. Looking into our core business, we achieved an organic increase of the adjusted EBITDA of 7.0 percent to €57,000,000 resulting in an 80 basis points margin increase to 19 0.0 percent. Bottom line, the adjusted net income increased by 33% to EUR 18,000,000 or 0.57 €0. Per share. Adjusted for FX, which is the base for our full year 2021 guidance, The annual growth rate amounted to 29%. Now let's have a closer look into the divisions. Plastic and Devices. Revenues in Q1 amounted to €155,000,000 in Q1, Adjusted for negative FX effects mainly from the U. S. Dollar and Brazilian real, organic growth amounted to 3.0%. In the Plastics and Devices division, we saw strong revenue growth in our RTF Syringe business. The positive divisional performance was, however, partially offset by phasing effects in our tooling business within the MPS. We expect accordingly somewhat higher revenues from tooling operations in Q2. The earnings development was impressive at Plastics and Devices in the Q1. The adjusted EBITDA increased From €31,000,000 to €34,000,000 on the back of a better product mix. This hike represents an organic surge of 13% compared to last year's quarter. Consequently, the adjusted EBITDA margin climbed 210 basis points from 19.9 percent to 20.2%. Primary Packaging Glass. The Primary Packaging Glass division grew organically 3.2% against the strong comparison in last year's quarter. In addition, the molded glass cosmetic business was adversely impacted by the ongoing lockdown. Within PPG, the revenue development was twofold. On the one hand, we had Standing double digit revenue growth rate in Tubular Glass. On the other, molded glass mainly suffered in cosmetics. Tubular Glass benefited from strong demand in High Value Solutions, which doubled revenues in Q1, mainly Biologics, RTF, Elite and Elite RTF. Elite Glass and COVID-nineteen vials contributed by a mid single digit million figure each. In molded glass, the cosmetic business has been impacted by approximately €4,000,000 negatively. The adjusted EBITDA dropped to €26,000,000 in Q1 2021 and reached a margin of 18%. The adjusted EBITDA was mainly affected by 2 events. 1st, the furnace construction and the expansion of furnace capacities At our plant in Loa, which has been originally planned for full year 2020 and had to be shifted into full year 2021 due to COVID-nineteen. This impacted the adjusted EBITDA temporarily by around €5,000,000 For Q2, LoRa is up and running again with even higher capacity. 2nd, Furthermore, we had some headwinds from higher energy costs of around €1,000,000 As in Q1 2020, positive support came from the insurance reimbursement in the low single digit €1,000,000 range. The insurance compensation is caused by financial damages linked to the furnace leakage in the U. S. In 2019. It is mainly associated to lost business representing revenues of around €4,000,000 in Q1 2021. Advanced Technologies. The revenue increased to €2,000,000 in Q1 2021 and was in line with our expectation. Further, adjusted EBITDA loss in Q1 totaled minus €3,000,000 also as planned. Please note that GAT is not part of our full year 2021 and midterm guidance. With regards to GAT, I would, as usual, like to highlight 3 main points. 1st, Advanced Technologies is an innovation driver by developing intelligent drug delivery systems and steered as a long term investment case. And please remember, all the potential benefits of this division are excluded from our guidance. Sensile is financially a very promising call option 2nd, moreover, we have changed our revenue model. Instead of getting reimbursed For development costs from pharmaco, we prefer to get a higher portion of the revenues from our pharmaco partners instead. In other words, we evolved from a contract developer for PharmaCo to revenue sharing partner of pharmaco. 3rd, we are expecting 1st sales contributions from our micro pump for chronic heart failure treatment with SKU Novation in the course of 2022 onwards. On the next slide, we show our group figures and the reconciliation from the reported to the adjusted figures for Q1 2021. Reported group revenues in Q1 2021 came in at €303,000,000 Adjusted for FX, we achieved a strong organic revenue growth of 3.7% year over year. For the adjusted EBITDA in Q1, we even managed to achieve a stronger organic growth of 9.6% year over year to 50 €4,000,000 Following the stronger adjusted EBITDA increase compared to revenues, we managed to strongly expand the adjusted EBITDA margin by 110 basis points to 17.9% as already indicated before. The bottom line was supported by a lower depreciation rate. The lower depreciation rate was mainly related to the review of useful lives of our assets and additionally benefited from positive phasing effects of our assets in construction. Let me conclude by noting that we had no material deviations with respect to our adjustment line. Key elements include purchase price adjustment and minor exceptional expenses, mainly related to COVID-nineteen. Let's turn to the cash flow. In addition to the pleasing revenue and adjusted EBITDA performance, we also showed strong Improvement in free cash flow. In Q1 2021, the free cash flow improvement by €90,000,000 to minus €59,000,000 compared to the Q1 2020. And this was achieved despite €3,000,000 higher net CapEx. Beside the higher EBITDA, our main lever For the strong development was a strict net working capital discipline. Side remark, we achieved this improvement without any additional On the back of Q1, we reduced our net financial debt to EUR 986,000,000 compared to more than EUR 1,000,000,000 a year ago. This brings the financial leverage down to 3.2 versus 3.4 times last year. As a reminder, the financial covenant for our revolving credit facility stands unchanged at 3.75 times. This covenant gives us a solid financial headroom. As a summary, we got off to a good start in the New Year with a pleasing profitability improvement and a solid organic revenue growth. We expect that the growth will even accelerate in Q2 2021 and that our high value solutions take off. On this positive note, I now hand back to Dietmar. Thank you, Bernd. Ladies and gentlemen, the transformation of our Gellisheimer is ongoing. We have set ambitious targets and are now consequently implementing projects, initiatives, measures in order to achieve these goals. We are on the right track and started our growth acceleration. I'm excited to see how the group of The results are becoming visible, and this is further increasing the dynamic and the momentum in the whole company, bringing evidence into our long term guidance for high single digit revenues growth or revenue growth from 2022 onwards. Let's look at the outlook. We are looking forward to a solid second quarter. Our core business is accelerating with growth visible in all segments of the business and over proportional growth in high value solution areas. In Plastics and Devices, we anticipate solid mid single digit growth with further Double digit growth rates in our syringe business. In PPG, we expect high single digit revenues With major growth contribution in tubular glass, the furnace replacement in Loa Will be completed or is completed. We actually have already restarted the production, and this is all very positive. The running projects in Advanced Technologies are on track. The expansion of expertise is ongoing. Key hires complete Team, the elaboration of further business opportunity is in full swing. To sum this up, we confirm Our full year guidance and stick to our plan to deliver mid single digit revenue growth in 2021 for our core business with high single digit growth in the midterm. For the adjusted EBITDA margin, we are guiding for 22% to 23 We are striving for adjusted earnings per share growth of at least 10% per year. Ladies and gentlemen, The Gannesheimer journey has only just begun, and we are keen to keep on this path by accelerating our growth momentum. The whole team is working hard and is fully committed to bring out the best of Ganesheimer and to maintain sustainable growth. With that, I hand back to Carolyn and look forward to your questions. Thank you. Thank you both for your presentation. The lines are now open for your questions. The first question comes from Veronika Dubajova from Goldman Sachs. Veronika, please go ahead. Excellent. Good afternoon and thank you for taking my questions. I have kind of 2, please, one a little bit shorter term and one slightly bigger picture. But Just looking at the guidance, Dietmar, you've given us for the Q2, and thank you, it's really helpful, but Just kind of trying to reconcile the mid single digit growth expectation you have for Plastics and Devices, with the fact that obviously Q1 came in at a fairly underwhelming 3% and then the comparison base is pretty difficult for the Q2. So if you can kind of help us understand what drives that comp adjusted growth acceleration as you move into the Q2 and your degree of confidence in that mid single digit growth expectation? That would be really helpful. And I'll let you answer that and then I'll ask my bigger picture question, if that's okay after that. Yes. From my point of view, you can stay cool here. Sales are good. We had some timely shift Some tooling business from the first into the second quarter, you cannot plan this month by month. And I'm pretty cool the Figures will look very promising in the next quarters. Okay. And then my sort of second question kind of bigger picture obviously and you've alluded to this a lot throughout your prepared remarks. Obviously, your ambition as a company is to really shift into some of the higher growth, higher margin, higher barrier entry segments of the business. And I ask This question every quarter, so I'm going to ask again. But can you maybe highlight some of the progress you've made through the quarter in terms of new relationships, new customers? And I think you've alluded to the order book filling very well. So I'd just love to understand where that interest is coming from. Yes. As a matter of fact, it's not only the quarter, but it's the last month that we're very successful. It's Sometimes hard if you mentioned this, but COVID really accelerated our access to new business opportunities. And it's not only It's really the opening of the doors into some of the customers and new opportunities. And There are of course a couple of other examples, the biologics that are running extremely well, but it's also new opportunities you might not think about in COVID. Take the all these diagnostic areas where we have a lot of discussions, several projects we are discussing with our customers There's nice opportunities, by the way, in plastic and devices. We have new opportunities for the syringes, small lot size syringes, but So on the new lines in Wackersdorf with special syringe solutions that are attractive from the margins. It's not every project is a huge one, but the sum of the different projects makes it very attractive. So We are you don't see this the figures Veronika, but it's a total different situation compared to my call after the Q1 Last year and honestly spoken, yes. Understood. Thank you, guys. I'll jump back into the queue. Maybe just Veronika, just to add on what Dietmar just said Regarding the growth for the upcoming 9 months, I mean, we see the same momentum for high value products like you have seen this now in Q1 And maybe with the growth of around 30% for high value products for Biologics, we have also a strong growth Better than for the next upcoming months. And as mentioned by Deepa, the order book is really full and we have a very, as you know, a very precise, Very good forecast accuracy. So with this spirit, we are really in an excellent mood here in Dusseldorf. Got it. Thanks. Next question comes from Odysseus Manasiotis From Berenberg, please go ahead. Thank you, Caroline. Good afternoon here on behalf of Scott Bardo. I have three First of all, given that the cosmetics drag seems to have annualized, are you seeing any signs that this business will start Turning into a tailwind to group figures from the coming quarter? And also, if possible, could you remind us How this business's profitability compares to the EBITDA margins at the group level? Second question on High Value Solutions. Could you share some more detail on which parts are growing above your expectations here and why? And thirdly, could you also give us some more color on St. Celgier's filing for heart failure, please? Maybe just to start with the question regarding the Cosmetic, if I may, the last year we had now in the upcoming months, you're totally right, We were already let's say, we had already headwinds in cosmetic business molded in the last year. So we ended in Q2, Q3, Q4 With around €125,000,000 molded glass and this is a benchmark. We think that we will really be better than this €125,000,000 Maybe we came out with €135,000,000 something like this ballpark amount. But indeed, given this lower jump off point of the Last year, we think that we can really do we really think we can do better. Yes. I think the release we had for a certain time last year showed that if the lockdown Opening the business coming back very fast in the cosmetics and that's what we see. We don't plan this very strongly at the moment, at least not for the next month Because we I think the lockdown will still go on for some time. But if we see this in the second half of the year, it will definitely also help Yes. And you also asked towards the margins and the margin, I think, are fully in line with the margins we have in the Average business of Gagnerseimer. So they're usually pretty good actually. Yes, you asked the second question, the high value solutions, Where are we actually growing? The high value solutions, there's no doubt we are growing in the syringes areas, ready to fill syringes. It's unchanged to what I said last time. Every syringe we can produce, we are easily able to sell, and we could sell at least 15%, 20% more syringes as you would have the capacity, which we are adding, but it takes quite some time to add syringe Capacity here. Very strong. We are in the Elite glass. We have significantly wins and also first deliveries. It's in principle Even more than the COVID vials that we are shipping in the U. S, we did win further customers now with Elite, because if you have the first one, they are convinced about the Stability and the added value it brings to the production processes. So that's very good. It's even ready to fill In the glass that we are shipping, it's ready to fill vials that we are shipping in an increasing amount. And this is something we will definitely see also in the next Months, quarters and years to come, it's very clearly the stronger positioning towards the biological market that is Helping here because this is it's one of the areas where you use classic high value products. The last question was towards the heart failure. It's Sensile. It's probably the Project with SQ Innovation, this is in the clinical studies that are ongoing and It's on plan. The project is on plan. And if things go on like this, which we all hope, And there is a good chance that we really see the first sales in 2022 and latest in significantly sales in this project that is unchanged our expectation. I hope this answers your questions. That's great. Thank you very much for the clear answers. Are there any further questions? Yes, this is not I can see Veronika again. So Veronika, please go ahead. Veronika, we can continue. Sorry, I was on mute. That will teach me. If I could Just a couple of very quick kind of financial questions, I guess, if that's all right. 1, energy prices and just Broader kind of cost inflation, we're seeing a lot of signs of this elsewhere In terms of freight costs, in terms of energy prices, it just would be really helpful, Bernd, if you could give us a mark to market on where you are as you look at the remainder of the year. And again, just remind us what proportion of this you can pass through to your customers versus not. Thank you, Veronika. Basically, it's an estimate now, but I think compared to the previous year, we have probably €6,000,000, €7,000,000 higher energy costs based on the best estimates what we have now regarding the future energy price development. And probably apart we have actually hedged and apart we can basically transfer to the customer. So maybe we will end up Per quarter net is maybe €1,000,000 additional EBITDA burden, what we really can somehow manage. But there's a lot of volatility, obviously, in the numbers. Another topic is regarding the resin prices. What you will see here, And this is especially valid for our center operation, but here we have contracts which are mainly passing The resin price increases to our customers at least 50%, 60%, and this should help us also in the The top line at least. Okay. That's helpful. And then my other question was just on kind of The COVID-nineteen vial opportunity, and I think last time we talked, you alluded to you were looking potentially at Some ready to fill solutions as well for COVID-nineteen vials. Just curious if you have an update on the progress there and if this is something that might Maybe be a more of a midterm upside for your business as you think about the COVID-nineteen drag not drag, but sustainability of those revenues, I guess? Yes. The COVID-nineteen results are on plan. We actually have much more orders than we have capacity. So it's that looks very good. Ready to fill vials will probably it's Unlikely that they will be used for COVID as this is all high volume and the filling capacity is the Bottleneck actually, and that's why there will not be any retrofilled vials, it's mass vials here that will be used. Maybe to the raise in prices because Bernd mentioned it, it's important for Centur. It is as important, of course, for all the plastic business. And here, it's in Germany, we would say it's a real situation that in principle cost increases leads to a tailwind For us, because we can really pass through the prices very successfully here. And actually, with the higher prices, you have an increase on the top line. So It's a certain amount of tailwind that is coming from this aspect. Thanks, guys. Now we have Daniel Wendel from Commerzbank. Please go ahead, Daniel. Thanks for taking my questions. I have 2 on High Value Solutions. Can you talk a bit more about the revenue contribution you already achieved with CSI Value Solution products? And when you think of the main contributors for growth, what other contributors To growth, do you see that really over the next 1, 3 years beyond really elite glass, RTF bios and RTF syringes? That would be my first question. And the second question would be on RTF syringes and RTF vial. How do you see your capacities develop over the next 1 to 2 years for these 2 product categories. And then my last question is and sorry if I missed that in your presentation. And the line was not really good for 1 or 2 minutes. Your technical competence center in China, And what should come out of that over the next 2 to 3 years? So Deals and product, etcetera. Thank you. Maybe Daniel, maybe I'll start to see your tackle the first Regarding the high value products, actually, we had last year EUR 36,000,000 in high value products And increased this by EUR 14,000,000 to EUR 50,000,000 in Q1 2021. And as mentioned before, For the remainder of the year, we see also on the back of EUR 142,000,000 a growth of 30%. So really, somehow, a very strong growth for the whole high value product segment, what we have. What is really behind it is Actually, syringes, it's actually ready to fill, ready to fill vials. So all these innovative products, what We have, which are really contributing to this and also our franchise as far as our biological customers are concerned. That's really what is really sustainably and consistently contributing to our growth now in the last couple of quarters and which Really make a difference from old Gellertheimer to new Gellertheimer. For example, a good showcase is Elite Glass. I mean, when we talk about 5 1,000,000 contribution in Q1, last year, we didn't we had 0 elite glass revenues. And in Q1 this year, we have 6, and this really make a difference. Innovation is something what is new for Gaggenheim and we really make it happen. Yes. The elite class opportunities, we only started in the Q4 last year because that was when the processes were switched. And The ready to fill also the capacities for vials will be increased significantly. I will not disclose the details, but we will not only do this In Europe, but also in further regions like NAFTA, where we're doing it at the moment and also in Asia. And maybe this fits very well to the question concerning the technical competence centers. Maybe I have to repeat what this is. Competence center is where you concentrate competence on the one side, but you also make Competence locally available within our Asia strategy, for example, it became very clear that you can't be successful It's out of Europe or out of the U. S. You have to have local competences with local experts talking to the local customers. And that's what we are doing at the moment, bundling the competence. It's not only China, by the way. We will also add another competence center in India in the next years. And that will definitely help us. And it is part of a total strategy, but I can only give you a ballpark. You can expect In the next years, we will more or less 3 double or maybe even 4 double the sales in the region Asia. And Technical Competence Center is one of the pillars that we are using in order to do so. The other Expect is always also the increase of local capacities, but you need competences, capacities, strengthen the footprint, then you have To the customer and then the sales is moving ahead. Thank you. Next question comes from Aurel Oliver, Rheinberg from Kepler. Hi, Oliver. Oh, yes. Hi. Thanks very much taking my questions. 3, if I may. First, on the organic growth, it's encouraging to see a certain acceleration there. But if I may push you a bit, I mean, The comparison base is not too demanding. You had a kind of 2% organic sales decline in Q1 last year. So I understand that there's a 1% headwind from cosmetic sales, which is fair. On the other side, there was obviously some kind of COVID related demand. So After this kind of big investments we already have seen in the past, why is it more growth coming through? And can you highlight any kind of potential areas of weakness You've seen the Q1. That will be the first question. Secondly, on the other operating income that was actually up from €5,000,000 last year to €7,000,000 this year. I think it's nothing that you had to adjust the forecast. So can you just talk about what was driving this? And then lastly, my takeaway from the Capital Markets Day was that you are quite dynamic in terms of discussion about potential future contracts also And the contract manufacturing business, so you have the auto inhaler. Can you just update us in any kind of potential new contract outlooks in this area and probably also for SENSA? Thanks very much. Thank you, Oliver. Maybe I'll take your first question regarding the organic growth in Q1. Indeed, we had a 3.7 percent organic growth for the full group. You need to see that we had headwinds for molded glass, A cosmetic of around €3,000,000 So if you actually take this into consideration and to take out cosmetic molded glass, Then you are already with 5% to 6% organic growth and then you had the phasing effect of our tooling business. And I think this is also Something worth mentioning because we think and we know it that in Q2, we will be €3,000,000 better As far as our tooling business is concerned, in Q2 and in the end, if you take this under consideration, I think We would have also a pretty good quarter. By the way, what is important now is the acceleration of Q2. And here we see that we will be growing above 5 percentage points and we are very comfortable on this. The second question So can I just ask you then, you had EUR 4,000,000 from cosmetics and what were the other EUR 3,000,000? Basically, it's a tooling business. We have around 10 basically, big picture now, if I recall this correctly, We have around €10,000,000 tooling €11,000,000 tooling business in Q1 2021. It was a little bit lower than previous year quarter, And we think that it will be €3,000,000 higher in Q1. I think Q2, 2021, this was a tooling piece. Got you. And you should not forget that we rebuilt The furnace and lower. And as far as you're talking about sales, as far as EBITDA is concerned, This topic of lower is a topic for the EBITDA of €5,000,000 But your question, I think, was referring to our organic growth. The other topic is other income. That's in the end of the day, a bunch of items included there. What makes the difference? I think if I'm not wrong, we had to explain EUR 5,000,000 additional other income. EUR 1,500,000 is actually EUR 1,000,000 €2,000,000 is the sale of our leasehold land. It's quite interesting. We actually sold our little bit our heritage where we've our company exists now in 150 years almost, and we sold old ground here in Dusseldorf for around €1,000,000 to €2,000,000 The results is and really focused on our core business. It was insurance compensation, which was a little bit higher than previous year. And we have also FX Which needs to be included, and that's actually the topics in other income. What is very important in this context, In the earnings quality point of view, is Oliver, I think this €5,000,000 bucket what Justeepa mentioned, because in fact the earnings Concerned is our reconstruction of our furnace in Q1, we lost in comparison to Q1 2020 Almost €5,000,000 EBITDA. Good news is now and this was planned. Good news is now that we actually I have now a new furnace there, rebuilt with a higher capacity even. And this is starting now in Q2 as planned. And overall, I can expect that with this new furnace, we could be able to increase even our sales each quarter by €1,000,000 to €2,000,000 Revenues, so basically really good news on this one. And it also shows that we have to see the EBITDA on a temporary basis impact what we had now in Q1. This is, I don't know, Dietmar, regarding the contract situation, whether you want to mention something to this. Thank you, Bernd. I'll take the last point here with the you're asking about order intake, especially in the contract Yes, we've been very successful here. It's mainly in the areas of 10 auto injectors where we have key orders in. That It's also an explanation for some of the CapEx plannings that we guided into. These CapEx you have to do immediately, but the sales is only starting some months or even years later. That's the nature of the contract manufacturer. But we are very well underway. Another aspect where we also since the Capital Markets Day have been further successful is in the area of diagnostics. I indicated this before And especially in the area of special syringes where we also are very well underway. So it's really order books are filling very nicely, And this gives us a certain, yes, confidence into the guidance that we gave for the following years. Perfect. And can you just discuss, is there any kind of ongoing discussions for any kind of potential new contract development mandates or anything on SENZAL? Yes. But I cannot disclose details here on the customers because that's by the nature of the business I can't do. But we are talking To other customers, not only in the products for small molecules, but also with new devices for large molecule That's great. Thanks so much indeed. Now we have Odysseus again from Berenberg. Please go ahead. Hi, again. Thanks for taking my questions once more. Just One quick one. You mentioned that you are moving from contract development to a revenue sharing model in some parts of your business. Could you please share in which exact areas of your contract development business you'll be doing that? And How are you thinking around the revenue contribution here going forward? As in how will it differ from previously? Thank you. Yes. You have to see where we come from, yes? When we acquired Cencil, Most of the contracts they had were based on we develop a product for you, you reimburse up for the development work, We are reimbursed for this. It's like sales, like an engineering office, and Then it's your IP. And then we produce the product ideally in sense that it was not even planned to produce it And that's it. Now it's quite different. We are the full owner of the IP. We have developed the products with our engineering work and We are selling the product including the IP to the customer, which in the end leads to the fact that you are selling a product with a certain margin, which is nice, But you also and here now it becomes attractive, you get a kind of license fee, call it license fee or A portion of the sales, for example, for your product and that, of course, makes the business very attractive. That's why we are So eager to see the first sales of, for example, the Sensile business because it will not only push us on the top line, but it will definitely also change And contribute very strongly on the bottom line as well because the margin will be very attractive. And that is the model we are now using for this project, but for the projects to come as well. Okay, great. That's very clear. Thank you. If there are no further questions, we would like to thank you 21. Please note, we are going to publish our Q2 results on July 13. All the best and stay healthy. Bye bye. Thank you. Thank you. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.