Earnings Call: Q3 2020

Nov 5, 2020

Welcome to Harvea's Q3 review. My name is Tapio Paio Harjo. I'm the CEO of the Harvea Group. I will be followed by our CFO, Ari Vesterinen, shortly, but we are today in special conditions and special distances. So you will not see me and Ari on the same picture. At the same token, I think there has been some kind of a technical challenge with the telephone landlines and they are unfortunately not working. So please pass your questions and comments on the chat. I will try to accommodate all the challenge in that respect. Let me begin with special thanks to the Harvia Group employees. An excellent job done keeping us all safe and healthy. And I think that has been an excellent job. And I think that's also visible in the top line as well as on the bottom line. So job well and very warm thanks on my behalf for everyone on board. So let's look on the business performance on the top line, very healthy growth on that area. The same applies for the profitability. And I think the COVID-nineteen has caused some major difficulties and issues, but we've been able to cope with that. On the other hand, I think it's also fair to say we've been gaining some boost on the demand on certain markets. And overall, the total impact has been favorable for Harvia and the sauna spa industry in general. The special measures taken have been well adopted in all of the units. And I think despite of the challenges and a bit of an extra work done by everyone on board, it has no impact on the productivity and profitability of the company. So a job well done on that one. On some of the markets, the demand has been clearly stronger than expected. On the other hand, we've been experiencing on markets, which have been very quiet, almost silent during the Q3, but I will come back on that one. The integration of the EOS Group and the new team members have been progressing well, even though we've been not able to do it in the normal way. So face to face meetings have been very rare And only one occasion, everything else has been done virtually over Teams or other means of remote working. But a job well done in that respect. And I think the long engagement period and getting us to know each other before the acquisition is helping us on the integration as we go forward. On the numbers itself, on the Q3, the top line growth was very substantial, 63.8%, and we even got bit of a headwind on the currencies. With the constant currencies, it could have been even slightly better than that. Organic growth has been very healthy, increasing a bit from Q2, where it already was on a very, very good level. Now the numbers are 35.6%. And even though we've been adding the EOS and they've been doing an excellent job on their respective markets, the hydrovia team has been progressing well on all of the markets. The top line has also resulted in a very good favorable profitability, both on absolute terms where the booking is SEK 6,100,000 on an adjusted level and then in the relative profitability, SEK 21,800,000. With the constant currencies, we will be at par with 22 percent. Earnings per share developing favorably, doubling from the prior year Q3, and cash flow has been very, very favorable on the period. Then taking a look on the year to date, healthy trend continues. Organic growth close to 25 percent. Adjusted profitability, 15.7%. That's already slightly more than the full last year. And earnings per share and on a healthy level, cash flow good. Net debt performing well. And I think the leverage ratio, which due to the EOS acquisition, we indicated, we could be temporarily out of the scope of 1.5% to 2.5%, even exceeding 3%. We've been able to get it back on the lower end of our range in that respect, an equity ratio at 42.2%. When looking at the activities and the business performance and following the three parts of our profitable growth on the strategy, The increasing value of the beverage purchase have been progressing well, and I think we've been learning the upselling of the heaters and the heater related component quite well. The wood burning season has been slightly longer than expected. And I think those who will be longer on board may remember that the average price of a wood burning heater is clearly higher. And then usually when you acquire or replace a wood burning heater, you need to buy accessories. You buy the chimneys or you buy the connection pipes and all of that equipment. So that's automatically boosting the average purchase in that respect. But also on the area of the electric heaters, we've been able to sell more premium and with more features and functionality in that respect. Then we say within the team that this sale of a sauna is an ultimate proof of being successful in adding value in the purchase. And I think now when we've been successful in the heater sales and we've been adding on top of that the EOS, which is mainly purely heater and steam generator and control unit driven. Our good performance on the saunas has been slightly hidden. But please look at the numbers, and the sonar performance has been rock solid in that respect. Then I think during the Q2, we were facing a bit of a question. I didn't know how it's going to work. EOS is on the premium end of the residential market and then they are on the professional end of the market with the heavy duty equipment. And I think the expectations were not very clear how the premium end of the market will perform and how the professional end will perform. During Q3, we've been having solid performance on both of the areas, and the Airs team have done a great job together with our partners and customers on the marketplace. Regarding the expansion, the North American Almost Evansona expansion is doing extremely well. The new sales channels have been fully functional and fully operational. We've been having bit of a challenge with coping up with the volumes, and our capacity has been limited. We've been tackling that with doing less campaigns and less activities. And as we speak, we are in the process of installing the capacity expansion in the U. S, but I will come back to that in a second. Scandinavia marketplace, later when we look at the numbers, you will see that we've been ahead of the market, and we've been receiving lot of new customers on the residential area as well as we've been opening the doors for the professional market going forward. Then regarding sales force, we've been strengthening our presence in the Asia marketplace and then Australia, Oceania. I think having said that, I think we are still in the very early phases, and one could not expect that we will land on a multimillion incremental sales in a short time. But we've been able to recruit capable, very professional people on board. And during the journey, we will we can take clearly better steps forward on these two markets. Productivity improvement. I think despite of the COVID-nineteen, we've been able to increase the productivity. We've also been getting new team members on board, roughly 40 people on board. And I think the on boarding has been done extremely well because it had almost no impact to the productivity numbers. So the core team of Harvea has done a good job of taking these new people on board. And I think also in that respect would like to pass my special thanks to everyone doing the on boarding for the new members. Then regarding the supply chain, During the special conditions, I think there have been what I call extraordinary gymnastics in getting all of the supply chain working like a Swiss clock. We've been extremely good together with our partners and have been able to supply everything needed. Having said that, at the same time, we've been working with our customers and partners to understand that the lead times, which used to be rather short, have been prolonged and on the critical components a number of weeks forward. But I think everyone has been adopting the new ways of operating the new dynamics rather well. The U. S. A. Expansion is on time and on budget. And as we speak, most of the Romanian new machinery is being installed or is in the installation process as we speak. Then maybe last but not least, on the let me now think it's on the right bottom hand corner of the picture, we have our Murremes solar power station, which has been operational since June. And I think we've been able to produce quite a lot of electricity on the amount, which is basically taking care of all of the ventilation and on the cooling impacts of the Murame unit. And I think this type of things we will plan to do in the future as well. COVID and then regarding the COVID-nineteen, I think we have a bit of a mixed feelings and mixed picture. Partially, I think the markets which have been operating normally, they've been gaining bit of an incremental demand and boosting the strong demand. And then we have markets where the demand has been very quiet, if not silent, completely, and I will come back to those in a second. But I think seeing what is happening in the market, still we don't see any reason to change the long term view and the outlook for the company and the strategy in that respect. So we'll continue following that path going forward. Commitment and cooperation of our own personnel together with our partners and our partners' personnel has been extremely well done. And I think that shows that we've been able to select good partners, and the good partners have been also taking good care of Harvia going forward. The volatility of the demand is maybe something where I can paint a bit of the picture or maybe share the flavor how it goes. And I think even the markets where they've been rather quiet or silent, suddenly you may be facing a big peak on the demand, which is unplanned and unforecasted. That's what we are experiencing today and we'll continue. But we'll be learning how to work with that and how to address that going forward with the slightly longer lead times. Keeping us all safe and healthy is the primary target of our operation. So far, we've been extremely successful in doing that, but we've also been taking extra measures, and we'll continue doing extra measures in that respect. I think it's good to remember that we are not immune for the impacts of the COVID-nineteen, and we've been having close calls and will be having close calls. And I'm going to try to mitigate all the risks so that we'll have no impact on the performance or the supply to our customers and customers' customers. Components and the availability of componentry has remained reasonably good. We've been mitigating the lack of certain components by increasing our own buffer stocks and then also informing early in advance what are the new lead times for some of the high volume and critical products of our offering. When looking at the market split, 1st of all by the market areas, It's good to remember that, okay, even though domestic market has been growing clearly ahead of the market and still is a sizable part of hardware business, Today, more than 70% of the business is coming outside of Finland, and we've been expanding that. The other European markets is the 2nd largest. It's been going up quite nicely due to the addition of EOS, but also on the addition of being successful in the sauna sales. North America is clearly going up and on both on the heaters and equipment sales, followed by the success in the almost heaven saunas is now visible on the split. It's a bit hampered by the incremental sales of the heaters. When you see the absolute numbers of the saunas, they look good in North America, both on the equipments of sauna. Germany, growing up due to EOS being half German, half rest of the Europe and then a stint into the Russian marketplace. Russia, due to the COVID situation, slightly going downwards. And HADOVY as a standalone, we've been flat or slightly going down. But thanks to EOS, we've been slightly growing on the Russian marketplace. Then on the revenue by categories, heaters is still far the biggest even though the sauna has been growing extremely well organically. And then the control unit sales have been rather okay with the HireVIA. But the EOS offering is premium, especially in that respect that most of the heaters and equipment is sailed with a premium multifunctional control unit, and that's why the sales of the control units has been growing quite nicely. Then you take the year to date look, roughly the same picture, and I will not go in details on the markets, no major changes on that one. Maybe the only issue to mention on the sales by product category is the sales of the steam generators, That's maybe hurt most by the COVID-nineteen as most of the sales are targeted in the markets where COVID-nineteen has been hurting the demand quite a bit. Then when looking at the individual markets and the growth, this is the bridge from last year Q3 from SEK17 1,000,000 to SEK28 1,000,000. And seeing that Finland has been growing only $1,300,000, I could say. On the other hand, 22.5% is clearly ahead of the market and the Harvia offering, and the team has done a great job on the domestic marketplace. Even though the pillar is rather small and in Scandinavia, the same applies for Scandinavia and the 22% growth. Our Scandinavian market is beating the market quite nicely. So we've been gaining share. Germany, excellent growth. Partially, we can give thanks and credit to EOS, but only partially. The Harivya team has also done a good job on that respect. And the same applies for the other European markets where both EOS team and the Harribbean team have done a great job. Russia, a bit of a mixed picture and rather volatile. And the COVID-nineteen has been hurting Russian market quite badly. Without the impact of EOS Russia, HEYDRAVIA own sales should have been flat or slightly downwards. It's good to remember that also the Russian ruble has been devalued quite a bit. And I think end of the quarter, it was rated at 90, whereas I think it was 70 or close to 80 on the respective period last year. North America, solid journey both on the heaters and equipment and especially on the Almost Heaven Saunas, good performance over there. Roughly the same picture applies for the year to date figures with the difference on the other markets, which is mainly Arabian markets, Asian markets and some of the markets which have been hurt quite badly with the COVID-nineteen. On the other European markets, the total numbers are very good and solid. But behind the scenes, still we can see that the southern part of Europe has not been recovering from the COVID, and the second wave has been hitting them quite badly. And like markets like Italy, France, Spain, Portugal, they've been rather weak and almost no activity on that area. By product group, it's easy to see that the sauna heater has been growing, partially due to good performance of Harivya, but then we've been adding the EOS on top of that. Sauna rooms, 50% growth, job well done. And control units, here is where the EOS, I would say, offering has the biggest impact on the control unit sales as steam generators are growing, but as on the full year to date picture, slightly backwards on the steam generator. That's where we have still work to do. Then I think we've been educating that in the sauna and spa business, quarter 1 and quarter 4 are the biggest ones. And then maybe on these krafts, it's good to remember that on this Q1 number, that's without EOS numbers. So it's not skyrocketing in like this, if you would add on the EOS numbers. And then when it comes to the quarter 3, quarter 4, I don't know and I think no one knows what is going to be the impact of the COVID-nineteen. We still anticipate a very good solid quarter 4, but I think it would be unfair to extrapolate this on a rocket skyrocketing curve in that respect. But I think all the dynamics will continue on the southern and spa market so that it's some seasonality. The middle quarters in between will be slightly softer, and the quarter 1 and quarter 4 are the top seasons for the sauna and spa industry. And then maybe just a reminder that we operate in all 3 different sauna categories, the typical Scandinavian sauna with the heater and benches. We've been learning how to entertain the steam room, steam market. We are in the very early phases of the infrared cyanide in that respect. And we stay loyal to the critical paths of our strategic execution. So we continue increasing the value of the average purchase, increasing the or expanding on the geographical arena. Oh, no, that I would also add that we are deepening and improving our quality of distribution in certain markets that we put into this channel. And then we continue the productivity improvement. And always, we put the picture of a production unit, but it doesn't apply only for the production unit. It applies for all of the processes in the company where we improve the productivity. Now I think it's time to pass the bar to Ari. And Ari, please, you can take a deeper dive on the numbers. Sure. Thank you. So hello, on my behalf also. Yes, my name is Ari Westerian. I'm Group CFO of Harvia. In a big picture, the financials, if you look at this table, you see that we are basically we have basically reached more or less in many, many, many profit and loss statement figures, the cumulative figures of the total last year already at the end of September. So and it means in practice that most of our or actually all our biggest units, they have been increasing in sales and also in profitability. And then German EOS has also contributed a lot to this growth. So we are quite on the level of the last year on the net sales, but then on adjusted profit slightly over. So the profitability has already WL has been increasing and that's nice. And especially during Q3, we increased our adjusted operating profit in money over 100%. So that was a really excellent quarter during very special times. About the seasonality, we are now in the middle of the main sales season for export markets like U. S, Central Europe and so forth. But now in this year Q2 and Q3, they have been also very special quarters and it's now really hard to say what is the main season and low season. We have season this year all the time. So and if we look at some financials which were not yet mentioned, the earnings per share, they almost doubled during Q3 compared to last year, and we have already reached the earnings pressure of 2019. The operative cash flow was really strong and that was thanks to, let's say, a speeded collecting and some other measures we have had in net working capital and so forth. There is job well done in many units. The net debt, we were really expecting to have it a bit higher level still in this fall, but the fact is that we have had very strong cash flow already. The beginning of the whole year, the operative cash flow has been positive €18,000,000 and year ago it was €8,000,000 So that leads to lower net debt and lower leverage that what we expected. So we are already at 1.5 leverage ratio. That's the lower end of our scale. And the adjusted return of capital employed is very good. We have eliminated there the goodwill part of the assets. But anyhow, it's really nice level of return of investment, and it's also much higher than a year ago for the whole year. Equity ratio has improved about 1% unit from the summer time. What is important also is to notice that we have now clearly higher number of employees in the group. As already told earlier, we have employed about 40 new colleagues. And out of this 587 persons, about 158 are now from EOS Group. So through acquisition, we got also new colleagues. The net debt is, as I said already, going down, and that was thanks to the good cash flow and we have had really strong cash situation in our group end of Q3, euros 22,900,000 and a year ago, it was €9,000,000 After that, we have already paid €3,600,000 dividends now end of October, but it's our normal seasonality. Finance costs have increased due to the EOS acquisition and it's normal in that investment situation. After the Q1, we more or less like postponed some investment plans because we didn't know that what will actually happen with the demand and the production output and necessity of having new machinery and so. And during Q2, we were experiencing really strong demand of our products and needed more output and decided to make bigger investments during the summer and during Q3. We have invested to production facilities in U. S, in Romania and also slightly in Finland. And this means also in practice that the investment level we have had until now roughly under SEK2 1,000,000, it will be going up a little demands. We need just more capacity. It's necessary to satisfy the customers and ship the goods. The structure of our shareholders' structure hasn't changed too much during Q3. What is only interesting is that a big public has found, so to say, the Finnish households, the shares of Harvia as an attractive investment. So end of June, we had something like 7,700 shareholders, now 9,200, and I guess we will soon exceed 10,000. And the level of the nominal registered and foreign investors has stayed quite the same. The shareholders or sorry, the members of the Board of Directors as well as the management and employees, they have also invested quite substantial money in the company and believe very strongly in this business. Harvia's long term financial targets. We aim and target in the long run a growth rate of over 5% and that's excluding the mergers and acquisitions. You have certainly noticed that we've been active lately in acquisitions, and we hope to be able to acquire some interesting companies and companies having perfect fit with us also in future. But this 5% is based on the expectation of the long term sales growth rate of the market. Of course, now the market has had a certain step change during Q2 and Q3 and business is going strong currently also, but this is the long term view what we think that we will grow. The profitability and improvement of the profitability is always on our focus, and we've been increasing the profitability quite substantially during this year and especially during Q3. Also the newly acquired company EOS has participated very positively to the profitability. And leverage ratio, yes, it's guideline where we think that the level of our net bearing debt should be, but we can go under that scale and over that scale depending on the situation. Harvia is a regular dividend payer, and our dividend paying policy is that we pay at least 60% of the net income in total annually in 2 installments. And this year, we have already paid twice €0.19 in April and in October. So any questions? We don't have now direct loudspeaker questions here, but we get them through the chat. So please. Yes. I have a couple of questions for Petrik Allianz at Inderes. And the first one is, how sustainable level is your €600,000 net financial costs per quarter? Is this high level just temporary? Yes, yes. That's quite closely the normal level. Of course, the value of our interest rate swaps, they may cause some changes on that, but that's quite the normal level right now. Second question from Petri. How sustainable level is your €1,000,000 CapEx costs per quarter? What sort of investments are necessary in the near future since you are growing so fast? I think like Ari already started to entertain the question. In the past, we used to be below SEK 2,000,000 on an annual basis. And now I think when we see the next steps going forward, they're going to be more than €2,000,000 but they're going to be not much more on a given year, I would say between 2 to 3, 3.5 max. And we can only take stepwise approaches on this area. Next one from be going so well for Harvey at the moment, which is great. Could you give us a short review of the major risks you see in the business going forward? And what could you, for example, slow down your growth and have negative effect on your very high profitability? I think on the growth arena, like I tried to inform, we are not immune to COVID-nineteen either. If something like a big bad outbreak could hit some of the operational units, for sure we are vulnerable. We try to fight it as much as we can and as good as we can. So we try to stay ahead of the game. But despite of that, there is always a risk. And then I think the other big risk we which I think is partially mitigated by having EOS unit factory in Germany, Modem is a big unit and then the China unit. If one of these could be hit by fire or something like that, then for sure, it will have an impact on our future growth and profitability. Harvea has changed a lot as a company after the IPO. You have mentioned that Harvea has been doing new strategy process during this fall. Can we expect some announcements concerning Harvea's strategy or updated financial targets? Or was this process only fine tuning? It was mainly fine tuning, and I think all the financial targets remain intact and valid. I think the only issue which I may have forgotten to highlight today on our 3 paths for profitable growth, The 4th one is for sure we're going to be actively participating in the industry consolidation and look for suitable additions to the Harvia offering in that respect. And Pessi from Inderes continues. You have recruited a lot of new members to Harvey family this year. What sort of contracts, part time, full time, the new employees have? And how elastic are these contracts if this year's high demand is partly COVID-nineteen boosted? All the recently joint members are with flexible contracts, either short term contracts or flexible contracts. Of course, we will also hire then some new core members out of these good people we have got with the temporary contracts, but we have currently mainly temporary contracts for the new people. Maybe I can add to that. We are very happy to receive such a capable and professional people on board. So we've been lucky of the selection. Also from Pefri from Inderes. Is there some pent up demand in the U. S. Since you haven't been able to manufacture with the pace of the last growing of the fast growing demand? Very difficult question. We face more demand than we can supply as we speak. On the other hand, we are prepared for the incremental demand, and soon we'll have more capacity on board. And I think that's not going to be the end of the story. We are prepared for the next steps. And I think in the North America, in general, I think the sauna is in a good trend and booming, not only, by the way, our type of sauna, it's also the same for the infrared and the steam. So we will definitely have a look on that market as a whole and keep up with the demand one way or the other. At the end of the summer, there were rumors that the German sauna maker, gloves, was up for sale. Is there any truth behind these rumors? And would Harvea be interested in looking at this deal? I think when something is on the merger market, I think there is no smoke without the fire. So most likely something is happening. And definitely, if that would be available, we would have a look. But I think that's all I can comment. Also from Pektoy from Inderes. EOS acquisition and integration have been progressing well, and the extra debt you raised for the deal has already almost fully digested. Is Harvia yet ready for new acquisitions? I think it goes without saying. We are preparing for that. We but we are looking very diligently what type of companies and what type of offering could be most beneficial for the hardware offering of our customers. So in that respect, we remain extremely critical of what to and how to. But for sure, we are active on that area. And the price what we pay, it has to be good also for the shareholder as an investment. Then we have Timo, who is that have you considered upgrading the long term outlook as the company has grown faster than them all the time and is not considering acquisitions? I think we are considering acquisitions, 1st of all. But I think the underlying market dynamics have not changed. And I think the market is growing slightly below 5%. And our aim on organic level is to grow more than 5%. So clearly gaining market share and speed on the marketplace. And then we have room for add on acquisitions on that respect. They might be small, midsize or large depending what comes available or what is suitable in terms of the offering and as well as on the valuation, like I said. What was the reason for that Q2 figures were given preliminary information? And this time, it was not so even though the growth figures were similar. I think the Q2 was clearly a shift in the trends. This was more of a continuation and quite close to our own expectations, so we didn't see any reason why to put out any type of a profit warning in that respect. We tried to communicate it very positively after Q2 also how the business is going, and we gave positive messages. And that's also the situation right now. Business is going positively. We also always compare what are the market expectations and we were not so far away from the market expectations as in the summer. So we decided not to preannounce. Growth in the U. S. Is strong, especially in outdoor saunas, and investments have been made there to increase production capacity. What is the target for their sales next year? And how much more it is compared to this year? Currently, online stores show sold out signs in the U. S. How much higher the demand is compared to production capacity? Even I would know the full answer. I would not share it over here. But I think we've our absolute aim is to keep up with the demand and be ready to supply as needed. So we're going to ramp up the capacity of both indoor and outdoor sound runs in the U. S. And the U. S. Market is also being supported by our European factory in Romania and potentially can be also supported from our Finnish factory of the sauna. So we do our utmost to keep up with the pace over there. And it's always so when you invest in new machine in production line or warehouse or whatever, it disturbs also the existing production slightly. So that has been also one thing. But now when during Q4, the investments get ready, we have, of course, clearly higher production output. Next one is from Maria Wieksdrom at Danske Bank. What was the organic growth of EOS in Q3? We don't disclose separately these company numbers. But now while this is the acquisition year and the integration year, we can make an exception. But normally, we will not report them separately. So it was over 20% also during Q3. This one is also from Maria Viegstrom. You say in the release that do it yourself and professional channels, the demand is stabilizing. Is this the comment for Q4, what you have been seeing in the month of October? Has the organic growth came down in October from 36 percent in Q3? I think that's not the comment for the Q4, not comment for the October. A generic comment, and I think if some of the markets used to be hotter than hot, now they are slightly less hot, but I think still we are enjoying a very healthy trend in that respect. But then I think on the professional market, the variance between the markets is extremely big and we are experiencing markets where demand is very solid, but then we also experiencing markets where there's no demand. And I think that's why this shift is changing a bit, but not in a big way. Q2 and Q3 have been fantastic quarters with organic growth plus 30%. You have commented that part of the advanced demand. Should we still expect you to reach your revenue growth target above 5% next year without EOS acquisition? We are in the budgeting process and figuring out, but I think our aim is to achieve the targets without acquisition for sure. And then exceeding 5% means exceeding 5%. And then I think there is no scale how much you can exceed 5%. Then we have Johannes asking, how do you feel going into 2021? The comparable base is quite high. Do you expect still to be able to grow in 2021 due to your strategy to increase the average ticket size? I think what is in our own hands, we know that we are capable of executing the plan. Then what is beyond our control is the market in general. If something would happen on the economical climate and sensitivity of the people who are investing into home improvement, investing into their free time and the free time facilities. But in general, I think Sauna is enjoying a very favorable trend throughout the world. And the wellness and well-being and even if the travel is partially changed, at least for some time, domestic travel and then people building their second homes and holiday homes and then, paradises on the backyard. I think that is still spot on into our activity. So within our own controllable activities, we feel very strong and solid. But then outside of our own control, I think it's going to be an interesting year. And I think everyone who can make a estimate and a guess can be equally right or wrong, as has me. Then we have Maria Macht asking, what kind of growth could we expect from the U. S? I think U. S. In most of the categories is almost like a mature market. When it comes to sauna and spa and well-being, there's still a lot to be done. And in the area where we are presenting is the traditional sauna. The journey is on the early stages. Then we are not entertaining any business in the steam sauna steam rooms. For the time being, we have no approvals, no licenses to sell. And the same applies for the infrared area. So in that respect, we are only addressing onethree of the opportunities. They are not in value. They are more numerical terms onethree. But I think a big part of the business is not in the addressable offering of Harribee as we speak. Going forward, we will try to find ways how to address also the steam market and how to become a player in the infrared in the North Americas. But currently, our efforts are fully focused on the traditional sauna and the sauna equipment. Then we have Ulla Serberg from AC Vision Fund. You mentioned investments were held back earlier in 2020, and now you're doing some catch up. How will this develop as we move into 2021? I think some of the projects which were put on hold and due to the I think even regarding our home base, this is a beautiful country where we have 4 seasons, and you can only build in summertime. So that season we missed. So some of the projects are delayed for the coming summer season. We'll address those. And then I think when we do expansion, some of the expansion and our type of machinery and the way we operate, we don't have big production lines. We have fully automation a big machinery at the early part of the process. The rest is more of an assembly and sell type of a base for the factory layout. And the ticket size is very per machinery, say, between €100,000 to €1,000,000, €1,000,000,000 2 on the machinery. But if you need to build some incremental space for the machinery, then it will add up on the price tag and also add up on the time line because building always takes a bit on the time. Then we have Karl What can you say on Tylohalo operational issues? I don't know them so intimately regarding the operations, but I think when you take a holistic picture of the Tylo Hello, one would expect them to be enjoying the same favorable trend in the North Americas as we are. They also have the steam business in the U. S. So most likely doing quite okay. On the European arena, I think they've been getting the act together, and they've been improving some of the areas where they used to be weak or mixed feelings on the marketplace. So I think they are catching up how to operate on the markets. Then we have Maria Viegstrom from Danske. Do you see that healthy living trend and sauna demand could hit China as well? What is currently happening in Chinese sauna markets? I think we know exactly how the sauna equipment market is trending and how to build and operate and produce machinery over there. We'll be learning how to be a player in the entry level of the sauna heaters and equipments. We've not been in the sauna business as such, but that's why we've been increasing the manpower and the sales force to get a better grip on the market. But due to COVID-nineteen, unfortunately, our Hong Kong based resource has not been able to travel to Mainland China, been doing it virtually, so been a virtual learning. But as we go forward, one day, we will have a face to face meetings with the customers and potential customers. And then definitely, we have plans to take steps forward on the Asian market and China especially. China has its own spa culture and sauna collapse. And so there is a demand for saunas for sure. Petrik Henning from INDERES is asking, has the Narvik factory fire affected the sauna market situation in any ways? I think what we've been seeing and also been in discussions with the Nairobi and the owners of Nairobi, a very unfortunate situation, 1st of all. But I think they've been able to recover, and they organized a special, I would call it, a temporary workshop where they are manufacturing wood burning heaters. And they've been gradually getting it up and running, which is good for the market. But today, if you go to one of the do it yourself stores, you may see some of their volume products, say, temporarily out of stock becoming available mid November or something like that. And now we try to figure out with our own domestic sales team, have we been able to enjoy a better ride on the wood burning heaters. But our understanding is that it's been very, very little impacting our wood burning market in general. Mikko Salmi is asking what kind of product development processes or projects Haraway has during this year and in the near future? Is there any technical improvements coming to the products? I think we tried to increase favorable features to our equipment in that respect. But I think where we are working and I think they are very applicable, especially outside of Finland is safety. Safety is one area where we improve the game and try to be best in the class for sure. The other one is convenience, convenience of usage because when it's convenient to use, the usage frequency also goes up. And the more frequent people do the sauna bathing, the more demanding it is for the equipment and the life cycle of the equipment is getting shorter. So we get a replacement sale earlier. Then the other one, I think, is on the wood burning heaters, cleaner burning and the lower microparticle emissions for sure. And in general, I think we try to follow the digitalization of the sauna industry followed by the remote operation, operating by the app and make it fully integrated to the house automation. So those are the areas just to mention a few. In the long term, is the CapEx sales ratio of 2 to 3.5 a reasonable assumption? As long as we are roughly on this type of a scale and scope works well. But if we would add up a sizable business on top of that, which is not fully vested in terms of capital, then I think we will need to reconsider improving the productivity and potentially acquiring modern equipment in order to keep the productivity up and running. The return on investment is still good. So if you can share your thoughts on new investments and how fast they get to the group level. I think we don't share any fixed number on that one, but we are practical businessmen and try to keep it on a very good ROI as well as a very short payback time. And in our type of industry, only the big ticket, which are basically must have investments, may carry a longer payback time than normal. And those are usually the machinery, which is core of your base process, which you need to have or you need to replace. And when they're getting old, I think it's the same as like an older car, You don't know whether a 10 year car will drive you back home safely and steadily. So hence, you need to invest in those type of investments, the payback time is longer. Usually, our investments have a very short payback time. Of course, we have a longer plan of investments for the future. But as we see this year, we have to adapt also to the market situation and the demand. So we are flexible. We also change our investment plans quite quickly if necessary. Yes. We are at most agile. If something is needed, we'll definitely go for it. And if there's payback, it's almost considered to be done. Thank you. We don't have any more questions. Thank you for the time. Enjoy the rest of the day. Wish you all the best. Stay safe. Stay healthy. Thank you. Bye now.