Earnings Call: Q3 2020

Oct 13, 2020

The conference is now being recorded. Welcome to the conference call regarding the publication of Results 2020. Now I hand over to Ms. Carolyn Nadilo, Head of Investor Relations. Welcome, everyone, and thank you for joining us to review our Q3 results. With me today are Dietmar Simson, our CEO and Doctor. Bernd Metzner, our CFO. As we did in the past, we are presenting a set of slides accompanying the management's notes in this conference call. The interim statement, the presentation and the press release are posted on Investor Relations website. Please note, this call is being webcast live and will be filed on our website too. Before we start, I would like to remind you that the presentations and the 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. Our agenda for today starts with the presentation by Dietmar Simson and Doctor. Brent Metzner. After that, we will enter into a Q and A session. And now it's my pleasure to turn the call over to Dietmar Simson. Yes. Thank you, Carolyn, and good afternoon, ladies and gentlemen. Good morning to those of you joining us from the U. S. Or overseas, and welcome to our Q3 conference call. I'm pleased to have you on this call today and hope brave, dynamic and innovative measures to learn from the pandemic and to force the long term growth opportunities. And it's important for me to emphasize that developments and the high dynamic in our Gerasimo. Let's look into Q3 and the outlook for Q4 now and the growth opportunities we are clearly facing. So let's start. Q3 is stating the obvious. Our core business proved very robust, growing organically with 2.1% despite the COVID-nineteen impacts. No doubt, we have been facing temporary headwinds in our cosmetic business, but the growth we have been able to achieve in the other businesses or business segments are able to overcompensate these impacts. We are continuously advancing our growth strategy, implementing the foundation for profitable sustainable growth. And we are looking into a very strong 4th quarter, meaning a back end loaded fiscal year. Looking at the top line, reported revenues in the Q3 2020 came in at 3.49 1,000,000 including the before mentioned impacts on parts of our cosmetic business. Bottom line, the adjusted EBITDA increased to €75,000,000 with an as well increased adjusted EBITDA margin of 21.5%. Also good to see that our free cash flow significantly improved year over year to €38,000,000 reflecting the strong earning quality in our company. Bernd will definitely elaborate on the financials in more detail later, but what is very important for me to mention is that we should not isolate the Q3 and look at the Q3 only, but look at the second half of our fiscal year as a whole. Our growth plans remain unchanged, and we continue to invest into innovation, capacity, quality, excellence and digitalization. The 3rd quarter reflects only partially the fiscal year's full picture, which is, as already announced, strongly back end loaded. We deliver on our promises, and we see a very strong Q4 ahead, supported by strong orders, new business SOPs and additional capacities showing now first results. This gives us the confidence to confirm our guidance for the full year 2020. The dynamic of the transformation in our Geraslama is continuously high, and the initiatives we are taking enable us to benefit from the global megatrends in Pharma and also Healthcare. Today, we selected 2 examples of the various activities in all areas of the biotechnology is a highly promising market for Vericimer. We see strong growth potential in the market for injectables in general. While the market for small molecules will remain strong, we see even larger growth potential for biotech based drug products, implicating an over proportional growth in large will make sure that Gerasama, with its unique broad portfolio of products, will serve the biotech companies with the right product solutions and that Gerasama will be part of this strong biotech market story or market development. We launched in the last month GX Biological Solutions, a dedicated unit with technical and development experts offering enhanced services for pharma packaging solutions in both the U. S. And also Europe. We are adding essential laboratory and regulatory services for biotech companies during the different stages of their drug development. The team offers these these S. Thus, GIG's Biological Solution is a full service provider serving the needs of small, mid as well as also The potential of GX Biological Solution is promising, and Unit already contributes to the implementation of our growth strategy. But of course, this is just the beginning. Our clear target is to serve the Biotech customers' needs with the whole contributors for both revenues and margin acceleration in Biologics for the next years will be ready to fill syringes and our Elite glass vials as well as ready to fill vials as well. Growth in injectables is one of the strongest global megatrends. Megatrends. Beside the growth opportunities of new drugs like biotech and biosimilars, we see increasing healthcare access globally, which offers an increase in in and vials on the recurrent necessity of flu or COVID-nineteen vaccination, we are convinced there will be a Thus, the syringes and also the vial business play an important role in our growth strategy. Having said that, some more words on COVID-nineteen vaccination. Right now, it's not yet clear drug will make the race for a COVID-nineteen vaccination in the end. My personal expectation and hope is that we will have several solutions in the market. The tremendous demand for vaccination units will be served through single or also multi dose vials. In case of a regular vaccination need, we expect this effect to generate a strong increase in the demand of ready to fill syringes in the outer years as well. Closely cooperating with our served over the loop of the next 2 years. And we also assume that today, we see this assumption to be proven rather conservative. Looking at the orders we receive from our customers, meaning by nearly all key pharma companies, it seems the demand is even higher than that. And we, as Gerasimo, will take a larger stake. In 2019 2020, we have invested in production lines, glass forming lines and syringes, and we will also do so in 2021 in order to cover the increasing demand. Furthermore, our new ready to fill vials machine in Boendale is now ramping up production. Our ready to fill 5 line for prefilled syringes is ramping up with production as we talk. We actually started this in June. Ready to fill syringe Line 6 will start production by mid-twenty 21. We are at the moment producing the machines. Thus, we are preparing our Garexheimer to serve this high demand for vials and syringes being a reliable partner for our customers and the patients out there worldwide. Being a reliable partner for our customers, this is what last months, we have put huge effort in focusing on our customers' needs, knowing that quality and availability are key for our customers. We proved highest quality and delivery accuracy also in times of COVID-nineteen. With our global footprint, we serve our customers locally without any interruptions in the supply chain, independent from the region in the world. Gerasama stands for long term customer relationships, our customers through a huge part of their products' lifecycle. Ladies and gentlemen, we are in the middle of our 4th quarter, clearly preparing for a strong finish of the year. Our Garus Markets Day taking place fully virtually on December 8, 2020. There, we will provide you with deeper insights on our growth strategy as well as our investment plans. We are looking our international experts on innovation, excellence and also sustainability. Looking forward to meeting you there, and please save the date. With this, I hand over to Bernd for some Before we go into the analysis of our figures, some introducing words. Recovering in Q4, but affects us in Q3 by around €6,000,000 versus Q3 2019. 2nd, in Q3 2020, we had negative phasing effects in P and D amounting to a mid single digit €1,000,000 amount, which will support us in Q4. 3rd, we will start with our delivery of COVID-nineteen vials in Q4. Backed on our forecast accuracy, we should realize a high single digit organic growth in Q4 2020. Now, let's dive into the P and L analysis of Q3. Our core business delivered revenue growth of 2.1 percent in Q3 2020. This includes the temporary COVID-nineteen onetime effect of about €6,000,000 in our Cosmetics business. If you look at our core business, without Cosmetics, the quarterly organic growth rate would have amounted to 4.5%. Reported revenues in Q3 2020 came in at 3 9,000,000 from EUR 359,000,000 in Q3 2019, mainly impacted by negative currency effects amounting to a total of €9,000,000 Let's turn to the earnings. Achieved a strong adjusted EBITDA of €75,000,000 compared to €72,000,000 in previous year's quarter, resulting in an excellent organic growth of 8.6 percent in our core business. Organic growth means FX adjusted and without considering the €2,000,000 to €3,000,000 positive effect from the first time application of EFS 16. Below adjusted EBITDA, I would like to highlight 3 aspects for Q3 2020. 1st, the positive one off effect is caused by the sale of our Kusnacht real estate. 2nd, as in Q2, amortization declined due to the extension of useful life of Sensite's core technology. 3rd, income that means without considering the 2020, we expect a tax rate close to that number. Midterm, we foresee, as you know, a tax rate of a closer look into the divisions, the above mentioned parameters are well reflected. Percent year over year. Due to negative currency headwind in the amount of approximately EUR 7,000,000 reported in Plastics Systems business, we saw some phasing effects in our tooling business amounting to a mid single digit €1,000,000 amount, which and that's important, will support Q4 correspondingly. The adjusted EBITDA improved from 23.6 percent by 3.3 percentage points to 26.9%. Main contributors have been all business units plus a positive impact of EUR 1,600,000 due to the first time application of EFRS 16. Without considering the EFRS and FX effects, this resulted let's turn to Primary Packaging Glass. Organically, revenues of the PPG division remained nearly flattish. Negative currency effects, mainly from the U. S. Dollar, impacted the reported revenues of our PPG division by about 2 €1,000,000 resulting in €156,000,000 revenues. As already mentioned, we had a temporary one time hit due to COVID-nineteen of around €6,000,000 within our cosmetic business. If you look on our PPG business without cosmetic, then you see even an organic growth of 5 percentage points. It shows that our PPG revenues in the Pharma business is developing strongly. The adjusted EBITDA increased from €30,000,000 in Q3 2019 to €32,000,000 in Q3 2020. This increase of €2,000,000 is remarkable given the temporary negative impact in our cosmetic business due to COVID-nineteen. We got supported by efficiency gains and further insurance compensation in the magnitude a mid single digit €1,000,000 amount, which compensates damages. This insurance compensation is mainly caused by damages linked to the furnace leakage in the U. S. Last year. One part is associated to lost lost consider. 1st, Advanced Technologies is an innovation driver by developing intelligent drug delivery systems Steel as a long term investment case. And please remember, all the potential benefits of this division are not included in our midterm costs from PharmaCo, we prefer to get a higher portion of the revenues from our PharmaCo partners instead. In other words, we evolve from a contract developer for Pharmaco to a revenue sharing partner of PharmaCore. 3rd, the development of our MicroPump for chronic heart failure treatment with the SG Innovation is on track with significant sales contribution expected in 2020. 4th, without any settlement proceeds, we see in Q4 around €2,000,000 revenues and a similar EBITDA level like in Q3. Let me now highlight the main points on the next slide. Our free cash flow of €38,000,000 represents strong earnings quality for Gareseimer, clearly outperforming Q3 2019 when the free cash flow amounts to €3,000,000 negative, a positive swing of EUR 41,000,000 This outperformance is triggered by our good performance in the core business, excellent operational working capital performance and the sale of our and receivables contributing to the net working capital reduction. Compared to Q3 2019, we improved this number by €17,000,000 With regards to CapEx, we stick to our investment program for 2020 and are on track to invest around 12% of revenues in 2020. Without the costnacht sale, we spent so there had been minor shifts due to COVID-nineteen. Let me now elaborate a bit more on the financial position of our company. As you can see, despite a dividend payment of €38,000,000 our net financial debt has been rather stable at €981,000,000 compared to the end of May 2020 figure. The adjusted EBITDA leverage calculated as net debt to adjusted EBITDA has been at 3.2x as of August 31, 2020, accordingly. The financial covenant for our revolving credit headroom in the amount of about €170,000,000 On October 1, 2020, we signed a promissory loan agreement amounting to €325,000,000 We saw a high oversubscription, which reflects the confidence in our business model and in the long term success of Garecyma. We achieved attractive conditions, which will support our net financial expense by EUR 500,000 per year going forward. We will refinance the promissory loans maturing in November 2020 and further reduce our drawing in our revolving credit facility agreement. Closing of the transaction is expected for early November 2020. With this positive news, I now hand back to Dietmar. Yes. Thank you, Bernd. On your presentation. Thank you, Bernd. Before everyone and the good listeners become too nervous to start, the first sales in the SQ Innovation business, we are expecting actually for 2022 and not for 2020. Yes, with this, I think I start to summarize a bit the key message in a few words. We actually are looking into a very strong 4th quarter, most likely the strongest quarter in Geras Hammer history so far because my plan is to do it better and better. In the plastic and device divisions, we anticipate high single digit growth in the 4th quarter. The phasing effects of the 3rd quarter affecting tooling business, as Bernd mentioned, will be offset in the 4th quarter, and we will see these sales. And we are producing syringes at full capacity. The Primary Packaging Glass division is about to contribute even investments into innovation are now starting to pay off. Investments into innovation are now starting to pay off. We will show first significant revenue contribution for Elite Glass in the Q4 of our fiscal year 2020. We see first sales from also starting COVID-nineteen vials deliveries, and we expect a first recovery in our cosmetic business also for high end perfume bottles. And a short update on our Advanced Technology division. The SQ Innovation project is on track. Overall, our expectation to achieve FDA approval at the end or by the end of 2021 is still valid. The conclusion for today is the following. We confirm our full year guidance, and we stick to our plan to deliver mid single digit growth for the is fully committed to deliver. Considering the global megatrends in Pharma and Healthcare supported or driven by COVID-nineteen, we are 100% dedicated to deliver our story becoming an innovative growth company and solution provider. Thus, we also confirm our midterm guidance. For the adjusted EBITDA margin, we confirm the 21% target for 2020 as well as the steady increase up to the 23% midterm. To sum it up, the full year 2020 is the turning point in terms of guidance and are looking forward to a strong 4th quarter. Consequently, take the opportunities and advantages out of the pandemic, adding capacities and anticipating growth opportunities in areas as of and healthcare industry. Our future Gerasemma will be the smart choice for pharma, biotech and healthcare for customers and and So let's enter into our Q and A session. The lines are now open for your questions. And the first question comes from Veronika Dubajova from Goldman Sachs. Good afternoon and thank you for taking my questions. I will keep it to 2, please. My first one is just your degree of confidence in the growth expectations you've outlined into for the Q4. Obviously, it's a very unusual year this year in terms of how heavily it is weighted towards Q4. So if you can maybe help us understand how much of that high single digit growth that you're expecting for the core business is underpinned already versus what are some of the remaining risks that you see? That would be very helpful. And then my second question is just on the profitability, looking at sort of the type of margin that you've delivered year to date. And normally, the type of margin step up that you get to normally deliver in the Q4, I'm a little surprised that the guidance on the EBITDA front is unchanged. I guess, is there any sort of one time costs or headwinds you're anticipating all for the Q4? Or is this more a function of being prudent at this stage given that you still have 2 months to go? Maybe I would take over the I don't know, Deepa, do you want to take the first? Both. I'll just start with the first question, how confident we are regarding our revenues, Veronika. Quite confident as we have the guidance ranges between 3% and 7%. We have a level of forecast accuracy of 98% now. We are in the middle of the quarter. We have certain effects which are really important for us. For example, one is the phasing of tooling. You know that we have a high volatility during the years as far as tooling revenues are concerned. And we are basically EUR 6,000,000 which we don't do in Q3, which we would normally, if you compare this to 2019, would have done, but other thing is that we see a recovery in cosmetic, which is very important now for Q4. Other thing is that we see a recovery in cosmetic, which is very important now for Q4. We have the same level as in Q4 like in 2019. And what is very important also for 2021 overall, our plan is that we will be for the full year 2021, that's our actual seeing in line with our in our business as cosmetic 2019. So we really see improvement in this regard, and this should help us on this end. And yes, level of forecast is very high. I mean, you have no, let's say, business continuity assumed we should really be there in this kind range between 3% 7%. But obviously, on the lower end of our guidance, that's clear. Yes. Maybe adding to that also from my side, we should not forget, maybe a bit unusual, but we planned this year was backloaded from the very beginning, independent from COVID. Why was this the case? Because we knew that the new RTF line syringes would start in June and it would steadily ramp up and we would principally mainly see this in Q4 and also the successful launch now, which finally leads to deliveries of the Elite glass takes place and it was planned in that way. So there's a couple of start up productions that are really planned like this from the very beginning. Bernd spoke about the toolings. And we should not forget, it's not a game changer in total, but we will start to deliver the 1st COVID-nineteen miles also in the 4th And yes, that gives us a certain confidence. Coming back to the question towards the profitability, yes, you might call it prudent. But I think it's reasonable that we stick to the guidance. And if we would over achieve, maybe it's also not so bad. It's fine that the parasymer learns to do this. Understood. It's always better to under promise and over deliver than the other way. Can I just ask a question? Okay. Very conducive to add on this. The thing is, this will be definitely Q4 regarding our margin. If you look now, Q1, we had 17% EBITDA margin. Q2, we had 22% EBITDA margin, Q3 2021, Q4 will be our strongest quarter regarding our margin. This is our expectation just to be totally clear. Excellent. Good. It's great to have that confirmation. If I can just a quick follow-up, Deepmar, just on the RTS, it seems to me that maybe you were accelerating the timeline for RTS 6 a little bit. Is that fair? And should we be reading that as a sign of confidence from you around the growth prospects that you're seeing for this business? And I guess just remind us the opportunity that you see there in particular with 5 and 6 as you think about the next couple of years? Yes. I think I need to bring some explanation into when we talk about RTF because there are two areas of ready to fill we are talking. 1 is the classic glass ready to fill syringe, which we the syringe market is 95% in the glass business ready to fill. Here we launch in June our next ready to fill line, which will add around the RTF6 we are talking about is actually also for syringes. That's the line that we are setting up at the moment and will start to deliver 1st volumes probably in the same period of the year in 2021, which is in June and ramping up steadily to the end of the year. The other aspect of ready to fill is across the vials. We have also set up the ready to fill capacities in Duende, the first vial line, and we have added ready to fill capacities in the North America region here in Queretaro in our Mexican plant, where we now have started to deliver ready to fill vials. It's the 2 things that you have to put in keep in mind. Understood. Thanks so much guys. Now we have Scott Bardo from Berenberg. Yes. Thanks guys. Thanks for taking the question. Just a question on the top line dynamic. I think that your guidance at the beginning of the year and reiterated in the Q2 was for mid single digit growth. And if I understand your comments correctly, you're more steering us to around 3% growth for the full year. So that sounds a little bit light of mid single digit, in which case I'd just like to understand, was it that this quarter was a bit softer than you expected? And if so, in which areas caught you a little bit by surprise here? Do you expect, therefore, a bit of a catch up effect into next year, such that you have slightly better or towards the upper end of this sort of bandwidth that you have identified, this 3% to 7%. So that's the first question. Just a bit of discussion on where Q3 sits within the guidance framework you set at the beginning of the year. 2nd question, please, without stealing too much thunder from the upcoming Capital Markets Day, but profitability for the business seems to be doing pretty well. Has this at this point triggered any reassessment as to the medium term margin projections for the business? And have you developed any thoughts related to your ongoing CapEx expenditure over the medium term? Thank you. Maybe I take the first question. Yes, I think one point is very important, Scott. You have to see, we are not steering the business completely in quarters. And I think you have to especially here, there were some shifts from the Q3 into the Q4. So you definitely have to see the second half year together. And that's the main surprise beside, of course, the impacts that we see in the perfume business here in the cosmetic area for COVID, which definitely we did not plan in the beginning of the year and we did not appreciate. But also here, we are very well underway. Take the cosmetic out. It is, for me, extremely satisfying to see that if you take the cosmetic temporary effect at the site that we've been very successful to bring the what we call the core business, the remaining business to growth. And you see and that's what I always wanted, you see that we are back in a real strong growth phase in the glass. And this is something where I'm totally confident that we will see this also in 2021 and the following years. And that is very good. Plus, of course, that the other business is also showing very reasonable growth, all in the very strong area of the mid single digit. I don't want whether you want to add something, about it. Well, I think there's 2 things, 2 aspects to it. In addition, maybe you have one is regarding the guidance. We had including basically gut, ZENZYLE, we had basically we are on the lower end. If you take that out actually because of the special circumstances of the last year, then you really see a nice organic growth, but we should not forget, which is more in the midpoint direction and fueled by our strong performance in Q4. So that's and therefore, if I look now at Q3, it was basically like planned. Maybe we had this kind of cooling effect shift going more into Q4. We have not foreseen by the magnitude of €3,000,000 or so. But did you have this catch up in Q4, so nothing what worries us here in this direction. Regarding the it's a good thing, Scott, regarding your question regarding margin development and the Capital Markets Day, indeed, yes, we have now all hands on deck to make our budget preparation. We are doing this during the course now of October November, and we'll talk about it also when we are at the Capital Markets Day. Regarding the margin, but what we can say is that if you look in our midterm guidance, what we have said that we go into the direction of 23%, it's no question that this will be also the this will be no surprise also at the Capital Markets Day. The only question is when you actually can achieve this. And therefore, and we want to show also a nice trajectory going forward now from 21%, direction of 22%, direction of 23%. So you really see a nice development into this direction over the course of the next years. One thing other thing is it's not a secret. It's a part of our investments, what we are doing. You tackled on it. It goes also in the direction for digitalization, also making more efficiency gains here and there. And this is something also a testimonial that we get there with this kind of margin improvement. And probably, I'm just calculating out of the top of my mind, maybe 20% of our CapEx and what we're investing also goes into this kind of efficiency gains. And Understand. Thanks. And maybe just a quick follow-up on the CapEx point, because I think previously, on the previous management teams, there was this notion that we're at the top of the CapEx cycle and that, that should moderate. Now I know, of course, Garo Scheiner is becoming increasingly Growth Hungry. But can you give us some directional comments as to whether you believe that CapEx will naturally moderate from this point? Or will it be sustained at these higher levels? That would be helpful to avoid any sort of surprise in December. Yes, we are not ready with the budget, but it's clear. I don't disagree to that that the growth is demanding quite some CapEx, but it's not my key target to keep the CapEx at a super small level. It's my key goal is to make sure that the CapEx we are investing is also translating into growth or profitability improvement. What is good and you might not be able to see this from the outside, but we see this, it's maybe not proven 101 now in the financial results because the COVID is mixing up a little bit. But it's for me very satisfying to see that the investments we are doing are actually already now starting to show results in both sales, but also in the improvements. Some goes far too far into the detail, but some of the improvements of the process capability that we invested are clearly showing that, for example, the cost of nonconformity or cost of non quality are going down and you see these effects. And yes, you might also be able to see them in the profitability over the LiU for the next quarters. So it's good. Okay, very good. Thanks very much guys. I'll jump back in the queue. Yes. Now we have vials opportunity for COVID vaccines. Based on your presentation today, it sounded like the opportunity for you could be a little bit larger than you initially expected. Can you tell us if that is a correct assessment on my end and whether pricing for these vials has been stable? Then secondly, on your cosmetics business, do you expect it to be back on the prior year's level in Q4 or even slightly growing again? Or would that be too optimistic? And then thirdly, on the last call, there was a bit of a discussion around potential funding from government authorities for all your expansions to deliver the COVID vaccine vials. Can you tell us if there's any update here and whether you're still hopeful to receive some funding? Yes. I'll take the first one. I think I already see in the direction of Bernd that he's absolutely eager to take especially the third one and also the second. So I start with the vials. Yes, there are still quite some variables within the vials, yes. But once I start with the what is really a factor. There will be a vaccination as soon as there is the right formulation found. There will be probably several pharma companies that find a solution for vaccination. So there will be a vaccination and there will be a demand of let it be some 5,000,000,000, 6,000,000,000 shots. The filling capacity is the more critical factor than actually the vials because due to the filling capacity, a lot of the pharma players dose, one shot per vial up to 18. This is actually reducing number of vials in total. That's where our guess and that's a pretty realistic guess, meanwhile, as we are deep in the process of discussing the things of 2 point 5000000000 to 3000000000 barrels that are needed worldwide within, let me say, the next 2 years, over the loop of the next 2 years. So who will be the supplier of these vials? And there are, in principle, the majority of these vials will come from 3 big players. We are one of these players. And as we are discussing the things, it seems that we might even be able to take more than a third, which is also a question of having the capacities available. We, in principle, invested in 2019 not in a super genius anticipation of COVID because we didn't notice, but we had to we planned some renewal of some lines, and we just now had some of the older lines running for some more months or years. So we invested in 2019. We also invested in further capacities in 2020. And we will also, in order to fulfill the market demand, invest in 2021. And this will bring us in a very good and favorable position to help our customers out here. This is by the way, a big added value for Garismar, far beyond the pure euros of sales because we are opening the doors with some of the pharma customers at the moment because they need these vials and we are able to support them where we, for example, today had no access to, at least not for glassware. And that is it's for us very important on a long term run, not only for COVID, but also for other customer access to be successful here. So this goes in a very, very positive direction for us, no doubt. You take the cosmetic. Thanks a lot, Heiko, for the question regarding cosmetics. In practice, it's like as follows. You had in Q4, now in 2020, we see that it will be the first time at the same level as Q4 2019. And this is true also for the full year 2021. So in 2021, we expect that our cosmetic business will be at par with our cosmetic business in the last year, so 2019 actually. So that's the situation for cosmetic, and this is how we plan and also how we plan for our capacities going forward. And we have a good proof point now with our Q4 now in this quarter. Regarding the second question, regarding the governance funding, as we are all around federal, state level, also at European level, but it's early to call it a day. We don't plan for that, but we are asking. And there are really nice funding pots definitely that we meet the requirements. And we are one of the companies which might be which might get finally also funding from the government. But we don't plan for that. It's simply too early. But maybe you asked me in the Capital Markets Day, I can give you an update on this topic. Okay. Thanks a lot. Next question comes from Daniel Wender from Commerzbank. Yes. Good afternoon and thanks for taking my questions. 3, if I may. Maybe a follow-up question on the vial opportunity for COVID-nineteen vaccines. Do you get the impression from discussions you have with vaccine manufacturers that eventually COVID-nineteen vaccines might also be something say, regular terms with time intervals of a few years, so that this opportunity will not end in 2022? My advanced technologies, if I recall that right, you targeted 1 to 2 new deals every year, development deals. Is that something you would still see? Or how should we think about this? Thank you. It goes in my direction. Yes. The question with the regular vaccination is a very relevant one. It's difficult for me to answer. But yes, we see more and more indications in the markets that a single vaccination will not bring sustainable results. So we are looking into this. I do not know whether it's 2 times, 4 times or maybe annual like you do for the flu vaccination. It is clear to us, we are ready to help. If you need a more regular, if it comes 2, 3 times, it will most likely still be in vials. If it comes really regular, that is something we are looking into because that would then mean it will steadily transfer from vials into syringes. That, of course, if you can if you just imagine that is a world market demand of $1,000,000,000 or $1,500,000,000 more syringes, that is something that takes time, at least 2, 3 years before the capacity worldwide are built up. We are definitely looking into this because $1,500,000,000 more syringes is almost 50% more of the worldwide capacity that is existing today. That would also for us mean I would have to add 50% to my capacity, only maintain my market share, which I definitely want. So we are at the moment, definitely looking into opportunities to expand our syringe capacity, by the way, not only in Europe, but also we would look into other regions like NAFTA region or also in Asia here, most likely China. Yes, Elite Glass, also a perfect question. Thank you for that. It's almost I would have asked you to ask this. The Elite glass is a significant improvement cost of ownership within the production process of our customers. Yes, the Elite Glass is more expensive, but it's much smaller. The tolerance is significantly harder, so higher in the resistance. So the total cost of ownership of customer. For us, this is strategically extremely important because the results of this customer will prove the efficiency of the Elite Glass and then show the potential of the market. I clearly see quite some significant potential in the Elite Glass in the next years to come, definitely. It's difficult to tell you how much. And the last question was? On advanced technologies, yes? Advanced technology. Also here, you should not limit the advanced technology story SQ innovation that I can talk about. We are in discussion with 1 or other player and you will understand. I will definitely and can't disclose here who this is, but we are in discussion with various other customers. But the story of advanced technology is significantly bigger than only the pump. You have to see what happened in the sensor that we once acquired in the last 2 years. We have now built advanced technology. We have hired new capabilities, new players and are working on what I call one of the future growth areas of our Gerasimo, which is smart devices. So it's not only necessary at the pump, we shouldn't have guessed we acquired the small company, Respir Matrix, with the inhaler, but we are also looking into further other devices. I can't go into too much detail here. We might show you something on the Capital Market Day, but I can't go into too much detail. But our vision very clearly is that Geras Hammer is supplier of a broad portfolio of different smart devices, whether it's a pen inhaler, auto injector, pump, and this all will be developed with an advanced technology. That's we're working on. And that's not just hope and pray only. No doubt, we are also in discussion with one other customer. That's music for the next years. Okay. So we should expect more news flow to come here on the partnering front? I mean what I told you. I clearly see that this advanced technology will be a strong further lag, whatever you're going to translate it into, my English may be not good enough for this, for Gerasimo in the future. Okay. Thank you. Now we have Christophe Grechler, Credit Suisse. Thank you. Good afternoon, Dietmar, Bernd. Thanks for taking the question. Actually, 2. The first relates to the midterm guidance. Can you just remind me, I mean, when you said that in terms of growth guidance, these mid single digits, we didn't know about this COVID vaccine opportunity. And now basically, if I just kind of look at this €800,000,000 at €0.05 I get to €40,000,000 which is now something like 2%, 3% top line growth. Is this kind of on top of this midterm guidance? Or how should I think about that? And the second question actually also relates to by chance to this COVID topic. I mean could you elaborate how these contracts work actually with these vaccine companies? And especially what type of risk you're taking on? Because none of them is now kind of approved. So there is still a lot of regulatory risk as we learned overnight from J and J, for example. And I was just wondering, is there any chance you can get upfront payments, for example, for as a reservation fee? Because I guess now you have to if they have some orders, now you have to kind of now set aside some capacities and then while you're unsure whether it's called up? Thank you for any thoughts. Maybe just as I take over the first one, Christophe, regarding the midterm guidance. Just to we have a broader range of between 3% and 7% for our mid how we call it, mid single digit growth. And this is our midterm guidance for our revenue growth. And this is one topic. The other thing is that we will, on the Capital Markets Day, elaborate a little bit more on it and being more precisely on what does it mean and translates to. Regarding the COVID, how does it work? Actually, you have €30,000,000 €35,000,000 maybe €40,000,000 additional revenues because of COVID-nineteen. However, it's basically spread over 24 months. So therefore, it comes not in one moment or one year, but it's spread actually over 3 years. You have it now a little bit in Q4, you have it in 2021 and you have it in 2022. So therefore, it comes not on top from today's perspective. But let's look at our Capital Markets Day, we have also our budget ready and then we can present the outcome of it. But that's where we stand as of today, mid single digit growth, including COVID-nineteen, with a range of 3% to 7% and the spread of the COVID positive, positive COVID effects basically 3 years, if you want. So 'twenty a little bit, 'twenty one and 'twenty two. Okay. Got that. Thank you. You should probably have felt meanwhile that this team that we have, the management is not satisfied long term with single digit. We will present it to you as soon as we have found the solutions. Coming back to your second question. I'm hopeful as well. The second question is an important question. And it's tricky because the prepayments you were mentioning or the pre reservation payments, they don't come for free and they carry a certain risk. And that's one of the reasons why I'm not overly motivated to go in this direction. Why? We do today not 100% know who are the real winners of this vaccination race. If I get a volume on this player. Let's assume this guy is not the winner. I have a reserved prepaid portion I can't sell. And the other customers with the worldwide demand are hungry to get this and I can't sell it. That's why I rather keep this neutral here. Am convinced that the worldwide demand is coming. We are one of the players that can satisfy the worldwide demand. And might sound a bit brutal for you, but if I don't sell it to winner A because he's not winning, I sell it to B or to C. That's the strategy that we are following at the moment. And do you also like kind of the airlines kind of oversell your capacity because you know that it's unlikely that all of them will be successful. Is this kind of a strategy you would consider, I guess, given, as you say, kind of there is very limited capacity in the market? Yes. But we're not doing it like airplanes, yes? Yes, yes. Then you don't get in. No, no. No, wait a second. Let me I have to do this like this, yes? The other point is, it's not this is not a game, yes? You have quite some responsibility on your shoulder. And we are not talking some demand of 1 customer that comes up. We are talking about demand of our customers that are our regular customers in the daily business, and they are our customers long term, not only for COVID. And so it's not a game where you mess up and you play the rules. I was one of your colleagues asked me, can you now squeeze out a lot of high prices for these vials? It's nothing you would do because it's not the behavior that Carah Sama shows in the long term partnership. I didn't meant to imply that for sure. But it's a very challenging situation for the whole industry, given these various variables kind of uncertainties. And you basically have to commit capital upfront. Thank you for taking the questions. Are any further questions? We have a follow-up from Scott. Please go ahead, Scott. We actually can't hear you. Beg your pardon. Sorry, I was on mute. Thanks. Just a couple of technical questions, please. Yes, but can you help us understand how much revenue you have lost in your gas business this year as a result of the fires and the damages and the warehouse issues and what have you? And whether all of those issues are resolved present a similar magnitude tailwind in 2021. So if you could quantify that, that would be helpful. And of course, on a similar topic, you have this Argentinian disposal in your plastics business. Could you give us some sense of what that is in terms of absolute magnitude? And are you planning any further disposals which could act as sort of a drag to revenues in the near term? Thank you. Thanks, Scott. Just for clarification, the insurance compensation which we get and when we talk about insurance compensation for the U. S, leakage furnace leakage, which we had in Q3 20 19, actually, you can say that each month, and that is really remarkable because we don't make a big fuss out of it, each month because of this leakage from 2019, we are losing USD 1,000,000 and we get compensated by USD 700,000. That's basically the ballpark. And this, you can multiply with 12. And then you have the yearly number. And this will last also December January. We should also get this kind of compensation for the lost business. This is as far as the furnace leakage is concerned. On top, you have one part as a business leakage. The other part is that we have to repair our furnace as well. And for the repair of the furnace, the permanent repair, I have to say, it's also now in the Q3, we have around, let's say, euros 2,000,000 which we got for the permanent repair. And the part of this is linked to damages. It's all damages. It's expenses like demolition, which is business interruption, some compensation and also for the damages caused by the permanent repair. And again, for the Q1 2021, we should also get EUR 1,000,000 to EUR 2,000,000 in addition for in U. S. Dollar the compensation for that. How this will develop, this business? We have to look at it. In the end, this is the coverage of our for our insurance compensation. It can only get better, the business over there, and we expect to get back to normal during the course of the year, of the next year, as far as the consequences of this furnace vehicles are concerned. That's the perspective of the insurance compensation and our furnace leakage. The other question was linked to the question, do we expect further as we sold Argentina last year, it was basically in Q4 last year. And with this, the year to date, you can expect EUR 2,000,000 it's basically EUR 2,000,000 revenues for the full year. It's really not so significant. It's EUR 2,000,000 revenues. And basically, the reason for selling it, you see it in the EBITDA number is basically 0. What we lost in terms of EBITDA is €100,000 or something. And now talking about what we could expect to sell also in 2021, we have nothing on the radar screen. Have nothing on the radar screen to sell. What we do is we look at assets which are as of which have no revenues, yes? As of, for example, real estate which are not used heritage from the past of Garettseimer, but is really minor in nature, which have no generated no revenues and are not relevant for our business, which we just make it clean up. Apart from this, there will be no sales sold in our company for 2021, at least not in our plan. Okay. Very good. Thanks so much, guys. As there are no further questions, we would like to thank you for joining us today. We already talked about our CMD taking place on December 8, but please also note we are going to publish our annual results on February 18, 2021. All the best and stay safe. Thank you. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.