Earnings Call: Q2 2021

Jul 14, 2021

So, dear all, a warm welcome to this quarter 2 presentation from Ayfri. My name is Jonas Kostassson, CEO of Ayfri. And I'm here now in sunny warm Stockholm, and I will do this part of this presentation. I, of course, also have Josep Pynon, our CFO, with me, and he is in sunny and warm Helsinki. So he will take part of the presentation. So again, warm welcome. Let's jump into the presentation, starting with the first summary slide. As you see the headline, strong organic growth, which was, I would say, one of the highlight of the report. We ended up at SEK 5,200,000,000 close to SEK 5,200,000,000 equal to 7% organic growth. And set was for us a step forward. Obviously, since 2020 has been a year when we had effects from the pandemic, we were really happy to see solid step into the growth mode. And as you know then the industrial side have really picked up for us then. EBITDA, SEK 416,000,000 equal to 7 8% EBITDA margin. But you all know then that we have done this change in salary accounting, which is a timing effect between the quarters. If taking that out, we would have been at 9.2%, which was also an improvement compared to last year. We had a negative currency effect affecting the top line and as well as the EBITDA, SEK 134,000,000 on top line and roughly SEK 12,000,000 on the EBITDA. Besides the organic growth that you have highlighted, also the fact that we have been able to close 8 additional acquisitions during quarter 2 N12 for the full year adding some NOK 500,000,000 or 2.6% on growth is also very positive. So as we decided last end of last year to really push for growth, both organic, but also get our acquisition kind of focus up again. So with that said, I would say that quarter 2 has been a step forward, and we are quite happy with a lot of things that we have been able to deliver on the Q2. Looking on the market, you could say in general that we are very happy with the market development we see on the industrial side. Also, in price is continued to be solid and strong, but I would say the increase in demand we have seen quite especially on the industrial side. It is driven from a lot of product from transitioning to more sustainable business as well as digitalization. So that's a trend that, of course, we continue to see and that we will do everything we can to focus on and be a part of that journey moving forward. Infrastructure has been stable. We can also see that, I would say, the real estate is getting back, still bit affected from the pandemic, but it's stable and good. Our division Industry and Digital Solutions had a really strong growth quarter. Last year was challenging, especially on automotive, but now we see that the demand is getting back also in automotive. So a good and strong quarter, and we see that market continuing to be favorable. Process industry really strong, and that has been that even throughout last year, and it continued to deliver stable and good margins as well as strong growth. We see a continued demand, especially on the OpEx side and also smaller scale products. So it's a stable segment for us. Energy, solid and good margins, and I believe it's the Q3 in a row where Energy Division delivers 10% EBITA margin. Not yet growing due to the transition we have done and the fact that we see an effect on decision making on large scale CapEx projects that is a bit delayed, that affects the growth part on Energy, but really solid performance on the margin side. And then Management Consulting doing very well. We see a continued need for Strategic Consulting Advisory Service on Bio Industry as well as Energy. So a favorable market right now and especially on the industrial side. There has been a lot of good products coming in. And what we can see is also it's mirroring the market. And A lot of product is related to transitioning to more sustainable business, clean energy. And this is a highlight of them. We had a good agreement to the Swedish public sector on IT, a really good product in IDS, turnkey project for Food and Pharma in Denmark. Some really interesting energy products, both in pump storage, but also in solar, both of them moving into clean energy as we are focusing a lot on. We are also involved in thermal energy storage in Finland. We have also done some really good projects in new production plants to Viking Malta's new production plant in Finland. And there has been also really good projects in Germany and Switzerland in transportation. So I would say that the overall market is stable, and Jusser will probably comment a bit on the product pipeline, but it is as solid as it has been done. And I think We will, of course, leverage now from the fact that we have a strong industrial know how as well as infrastructure. So many products are melting together. And then if you add digitalization on top of that, that's where we will focus a lot moving forward. I mentioned acquisition. Of course, we have really been focusing a lot on finding good acquisitions, supporting eifi becoming a stronger company, not the least in digitalization and also supporting our growth journey. And we have been able to close 12 acquisitions, some of them, as you smaller, but each of them adding to our portfolio. And quite many of these acquisitions have a big part of digitalization supporting our journey into improving our digital offering, supported from the A3X, where we are investing now, but also in each division that we are becoming a stronger digital company. NOK 500,000,000 roughly top line addition, 2.6% growth, and we will also continue throughout the second half year to hunt for good acquisitions. So that's been a really strong and good development during the 1st 6 months. We have a very active sustainability agenda, both working in the back end how we as a company can change, but how we can help our clients becoming more sustainable. And a few highlights, we were listed by Financial Times as one of the top 300 climate leaders in Europe for reducing the CO2 emissions intensity between 2014 2019. It's a recognition that we are moving in the right direction as a company. We were also awarded the highest sustainability rating at a platinum ranking from EcoVadis, which is the biggest global sustainability rating provider. Sorsgaard good recognition from us. We were also again highlight or listed as the number one company in Sweden among Researcher, which is really a great award to get because there are some really good companies there. And that strengthened also AFR as a brand moving forward. And then we have a lot of good cooperation with Norushion, Gapminder, and we have, as you Norden joined the 1.5 Degree Business Playbook. So, a lot of activities into making AIFR as a company more sustainable, but also how we can help our client in all the products moving into more sustainable solutions. So with that said, Juss show in Helsinki. Are you ready to take us through a few highlights from the financial part? Thank you, Jonas. Definitely ready. It's hot and nice Helsinki and happy to take forward from here. So in Q2, I would say that our story is on the growth. Net sales has been growing almost SEK400 1,000,000 during the quarter, the total growth being 7.7%. If we then take the negative FX impact and the MSA impact out, the organic growth was 8.7, But that is supported by one working day more in the Q2 compared to previous year. So the adjusted organic growth is 7%. I'm really happy to see that we are back on that one. And at the same time, 4 out of 5 divisions are delivering growth And 3 out of those ones actually double digit on the organic growth. We will get to those details a bit further. FX continues to burden us on some SEK 134,000,000 negative. But at the same time, we see that this is now stabilizing as we see how the currencies have been moving and how the big movements started last year in Q3. The strong development in the organic growth is coming from industrial segments, both Industrial and Digital Solutions and Process Industries and as well as management consulting, who is also working mainly on those segments. At the same time, with the revenue growing, on seeing where we are going from growth perspective, also including the MSA, which was SEK 1.7 percent or roughly SEK 80,000,000 in the total numbers. Then if we go, Jonas, forward to EBITDA development, this is also actually a story of growth. We delivered SEK 416 1,000,000 compared to SEK383 1,000,000 last year. Margin stable at 8.0. But at the same time, if we adjust for the salary accounting changes, we would have delivered 9.2 And actually, then the EBITDA growth would have been some 24% compared to previous year's Q2. We have especially strong performance in Process Industries, Energy and Management Consulting, who are on double digits, but at the same time also infra is delivering if adjusted for that salary accounting methodology of 9% as is Industry and Digital Solutions. Obviously, we are then supported by 1 working day more, But that's how seasonality goes in our business. Negative FX impact starts to also stabilize in the numbers. And finally, on the cost saving parts, it is contributing positively in our EBITDA generation. If we then go forward, Jonas, I will not dwell into the details on the change salary accounting method, but just a brief reminder Those of you who may have forgotten what it is about. So ahead of our new ERP system implementation, We are updating how we account the salaries. We are going basically into the real salaries, meaning that If you have 21 working days in May, you have fixed monthly salaries, Which are the same as in the 19th working day February. So that creates more earnings volatility, but it also represents fairly our working agreement structures. This is a wash in the year. So on full year basis, it evens out to 0. It is simply how we periodize The impact. Now we have taken NOK 28,000,000 negative in the 1st quarter, NOK 60,000,000 negative on the 2nd quarter. And main bulk of the positive impact is coming on the Q3, while then Q4 basically balances back to 0. And if we take both second quarter year to date figures, if adjusted for these changes, We would have been at 9.2% on both periods should we have continued on the old practices. But then going forward on couple of words more on the EBITDA bridge. So basically, What we see is a clear, clear improvement compared to previous year, especially in the industrial segments. Both Industry and Digital Solutions Obviously, facing difficult market conditions in Q2 last year is now back on track to get to the normal levels. And that is highly positive and visible in the absolute contribution in EBITDA. But at the same time, Process Industries running really well, management consulting also. Energy, despite having negative growth, contributing positively in the EBITDA, which we are really happy happy upon. And as Jonas stated on the revenue side, we have delays in the project starts, Which continues to impact energy revenue generation also in the second half. In infrastructure, showing red number 17, but if we would adjust order. Salary accounting methodology, we would have improved the absolute EBITDA also in infrastructure. Then we have the group common costs. First of all, I'd like to state that our cost structure is in a really good shape. We have continued positive impact from the cost savings. So this is not a question on the size of the cake. This is more question on how the cake is split among divisions and Group Common. Currently, as you know, We are investing in digitalization quite heavily. We have both the AprilX that is mainly intending to improve our client offering and ensure that we are in the digital part of the business in all ways what it can mean. At the same time, we have gone live with our ERP in the first entities, and we have started to depreciate that one, and we have some ramp up expenses on that part. Then the second part of the increased expenses in the Group Common is that We are now rehearsing what it means to come out from COVID from real estate perspective, how empty premises, empty workstations are Taken over by the group and make it as a group problem rather than a divisional problem because we know that there's room to Make facility usage more efficient in the future. So we are now carrying a bit more expenses on that side to ensure that our divisions have a solid strong incentive to enter as quickly as possible to the new world, what will come hopefully soon. Then going forward on taking a quick peek on the divisional growth and EBITDA. The biggest thing in here, if we look on the organic growth, it's the adjusted organic growth, excluding calendar, excluding MFA, excluding FX. We have 3 double digit entities, management consulting or Even knocking on the doors of 20 percent organic growth. Then we have Industry and Digital at almost and process industries around it well. I'm absolutely thrilled to see that we can ramp these ones up on the pace that we can we are doing at the moment and then same process industry and management consulting delivering at the same time double digit figures. That is really positive. We have to say that the industrial segment market position and market situation is improving, and that is driving the result development in all of these segments. Then we have infrastructure adjusted organic growth at 1%, delivering 7.6%. But remembering that if we would adjust for the salary accounting practice, we would be at 9%. We see that the market development there is quite good. It's solid as ever. But at the same time, the real estate segment, especially on the commercial side, is still burdened with the COVID. But just Put it in the comparison what I said on our own facility usage. I am quite convinced that we are not the only one thinking like that. And that continues to impact the market to certain degree. At the same time, on the longer perspective, I would think it as an opportunity for our type business where we are advising facilities on being more efficient, on being better. And every time you change something, you basically need engineering. So I'm fairly confident on that one. And once the COVID More and more gets out of the systems. This market also continues to improve. So all in all, looking on divisions, we are delivering solid results, solid growth almost throughout the organization. Then finally, a couple of words on the net debt, if you go to there, Jonas. Basically, we entered quarter at 2.2 adjusted net debt to EBITDA, which is still a solid one. Our target is to be on 2.5%. We have a good bandwidth to accelerate our growth. We have as you have seen, our M and A activities have been quite rapid. We have closed 12 deals During the first half of the year and 8 in the second quarter, we see that the pipeline continues to be solid and strong on that part. And from balance sheet perspective, We are ready to take steps necessary to improve our position, both from offering or geographical perspective The opportunities emerge. We continue to have very positive operating cash flow, not as positive as previous year. We have a net working capital tie up driven by the growth. But in general, still, I would say that solid cash delivery. But then at the same time, we paid some SEK 566 million of dividends to our shareholders, well deserved, happy to do that one. And then we have acquired companies, as you have seen. So all of those ones push the net debt from Q1 of 1.7 to 2.2 at the end of the second quarter. So happy with balance sheet, supporting our accelerated growth agenda, all looking bright going forward. Back to you, Jonas. Thank you. Thank you so much, Jusso. Thank you for that well presentation of the financial development. So I will just end then with a summarizing slide. So for sure then, as you have seen that we feel there is a positive momentum on the markets. We can see that the industrial recovery. It's going fast, and we are well positioned into that. The same with infrastructure also continue to be strong, and we have a strong platform. And I also have to say that last year, we had to focus on the cost side and efficiency because some of our segments went down when the pandemic were hitting, Autonauter is 1. But now that we have been able with our divisions to get back to growth that fast, delivering 7% growth and at the same time, pushing a lot on acquisition. At the same time, I'm impressed how fast we could go from needing to meet the pandemic and then ramp up to growth. So for sure, we will now build on that momentum to continue to focus on the growth throughout the next 6 months, the remaining of 2021. We feel that we are well positioned, as I said, both from the balance sheet, as Jussus said, we will hunt for good acquisitions. We believe that digitalization, of course, becomes more and more important, and we have a tremendous know how. We have a deep sector knowledge on the industrial side, but also on the infra side. We feel that we can use are also really skilled employees. We have more than 2,000 employees in different kind of digital areas. And to build on A3X where we look on Software as a Service models more and more to support our base business of consulting and project model to add on more and more recurring revenue models and to push for digitalization will be something that we will continue to work a lot with, and we have started up that journey. There's a company wide focus on sustainability, both in the back end but also in the front end, and we will continue to push for that. And then you also mentioned it since a couple of years, you know that we have invested in new system landscape. We are implementing a new ERP system and other systems then. And we will continue to implement them as we have planned. Rigorous implementation of that, and we are step by step reaching our ambition then to have an integrated system landscape supporting our platform, efficiency but also our growth. So we are really leaving the 2nd quarter with a good feeling and keen on then moving into the Q3 to push for growth. So with that said, I will leave it over for any questions that you might have. So please, Catherine, I guess you will monitor the questions. First question here from Johan Dahl. And the recovery in demand in industrial, what is the potential up demand or postponed projects. And what is the underlying CapEx need among Industrials, do you think? Thank you, Johan. A well formulated question. I will say that it's not so easy. And also you can support me in this. Of course, there is last year when the pandemic was hitting the industrial side, a lot of investment was put on hold. So we see some of those ones getting back now with the Industrial segment starting to have a strong belief that the pandemic will fade away. And if you, on top of that, put the need of transition, I mean, we have seen it in the Automotive segment now, where basically all companies go into electrification, adding them all the digital part in the transportation segment. My personal opinion is that we will continue to see a strong Industrial segment moving forward, driven from getting back from and investment need that was put on hold before during the pandemic. And if you add on top on that, the needed transition in industry into sustainable models. Automotive segment is a big driver to that. But when you just look now about the new way you're making steel in a more sustainable way as another segment than the whole energy transition. So my personal opinion is that both industrial side, but also the energy side, we will see a strong and good and related to the A3 offering moving forward. I don't know, Jussi, if you want to complement that. No, I think it is spot on. I think On the mid term to long term, there is a very clear investment needs in all of our key segments, whether it is automotive process industries or energy, We see the world reshaping and that requires also CapEx. So that one is very clear. But then obviously with the industrial segments, it comes a bit On the volatility side at the timing, the investments will happen throughout the years. But currently, pipeline looks really good, which I would say that all the stock process already now. So, as we said then, if you just look on the need and potential related to digital solutions and I think we will continue to see a strong Industrial segment. And then I think infrastructure, Needless to say, there is a lot of money that is invested in infrastructure in the Nordic, but also down in Europe. So that I think also will remain solid and strong. So let's see then, of course, the pandemic, how that plays out in the next 6 months. But again, betting on a solid market moving forward, and that's why we are pushing a lot on growth activities right now. So do we have a more and then other question, Katrin, from the chat. Sorry about the technical problems we have. Yes. We have three questions from Erik Paulsson. So I will take one at a time. Yes. So first one is regarding the order stock. How had this developed quarter on quarter, Positive or negative? I will leave it to you, Jussum. Order stock quarter on quarter, I will say solid and stable. What's your view? Yes, we are stable. And We take the whole portfolio. We see that energy has been having the struggles, but at the same time, projects are being awarded. We are waiting for the start. So, All in all, it is actually very stable. If we take absolute numbers and we don't adjust for FX, it is slightly negative, but basically, if we take the FX numbers, it is actually slightly positive. But As we have stated, the word is stable. So, stable. Yes. How has the pricing Developed during the quarter, even though it's a complex topic. Pricing is always complex, but a very interesting subject. So I will say that we are pushing for pricing, especially when the market is recovering. Jose, what's your view on the pricing? We have talked about it that in the infra segment, we are it's a lot of public projects and we are pricing ourselves on the level that the competition is doing. Your view on pricing, Jussum? Yes. Thank you. Like probably Eric, right, it's a complex topic. Let's not go into that one. I have the same words every quarter. But it is true that in the public sector, especially in the infra side, we feel pressure on the pricing. We feel that it is a highly competitive market. Then obviously, on the industrial side, especially places where we are already quite strong and the demand is strong. We have a positive impact in pricing. So all in all, The impact from pricing within the portfolio are slightly mixed. Yes. And of course, we will get back to you guys because At the same time, we are transitioning a lot into more and more projects. One key in our company is to sell on value, to try to go really on value based selling and what that means. So we'll get back to that. But in general, when the market is recovering, the pricing power is getting stronger and stronger. You have another question, Katrin. Yes. So this is the last question from Erik Paulsson. What is your exposure within Buildings and Real Estate? How much is towards residential and how much is towards commercial? So I'll leave it to you also to go into the but I will say the majority of our part is to commercial buildings. And of course, there's distribution when you start to talk about big investment in hospitals or in airports Orange Complex Commercial Building. And there's a part then we have some architecture business, for example, on the private side. So I don't know, Jose, if you want to comment about the exposure to real estate as a total. Yes. So basically residential is quite a small portion of our total exposure in the real estate. It is actually not that material on the total portfolio level. So basically, I can't say all, but big, big majority of all the offering is going to commercial and public buildings rather than residential. So that's in general then. So I believe also, as you also said, that we will see a continued improvement on the real estate side also for us then. And we have seen it a bit in the second quarter still affected and as the pandemic is still around us. But of course, all changes now moving ahead then as a part of the post COVID will have impact and changes will be needed to do. And I think we are a good company to work within that area. So, Catherine, any more questions from the chat? Yes. We also have a question from Johan Sundren and Dan Johan Sundren. Thank you for e mailing. So a question from Johan Sundren. Given your wording, it seems as the energy market has become weaker. Given that you see regarding the project starts, is worse ahead of us or is it at the bottom? As a good because I'm not sure I would say that it's gotten worse. I think we have been maneuvering in a pandemic situation because when we talk about energy for Eifry, we have a portion of energy that is driven from the Nordic energy market, especially a lot of service offering and small and midsized product. Here we see the market continue to be stable and good, and We signed a very good contract with Wattenfall that we also published the other not too long ago. So there we see stability. I think it's these big CapEx projects on a global basis where, of course, the pandemic on the global is still really, really around us. And here we have seen some delays. Very few or if not any kind of cancellation of projects. And that is not, from my point of view, worse or better than it's been over the last quarters. I personally believe that we are starting to bottling out, betting on the fact that we get also a bit control of the pandemic on a global basis, that we will see the CapEx project on Energy starting to be released moving forward. But that's my own personal guess. I don't know, Juss, if you want to add anything to that statement. No, I think that is quite spot on. Then the final component that needs to be understood is that how a project generates revenue, especially when we are talking about CapEx project. It is like a S curve. So you have a ramp up period where the revenue generation is quite slow. Then you have the peak on the S, where you have the very, very busy time on the project where you generate a lot of revenue and then you go back into the handover phase where you once again generate less revenue. And once the COVID has been pushing the start of the projects forward, we will have also looking the coming quarter or 2, we will have many projects in the start up of the S curve, and that will hamper us. So as such, the market conditions And the numbers of the project and the opportunity pipeline is solid. So the market is good, but the difficulty is on how you get the project into the start up phase and into the accelerated revenue generation phase, and that one will be visible in the coming quarters. So market is good, but due to how the market how the past has been hampered by the COVID, it continues to impact us still in the coming months. Thank you. And the next questions, margins in Energy and Process Industries Are once again strong. How sustainable are these levels? Well, I think if you look on the process industry. I think you have seen that the margin have been stable throughout even last year, plaseminus even with full effect from the pandemic. And it shows us shows that we have a really, really strong position in that segment. I expect that to stay. It will be we will always have some fluctuation, but You know, we are looking also how to expand our offering into process in the industrial segments like Mining metals, but also supported from a very strong position in Bio Industry. On Energy side, I think we have done a great journey because you following former OF. Then many years back, we had the struggle to get our margins up and even to drive that business. Now we have done, I would say, the whole repositioning of energy. And we have said for some times that we have 8% to 10% margin corridor. Now we have been delivering on the high side on that 10%. But I expect the Energy segment and our Energy business to remain on solid good margins and then, of course, getting back to growth. Jocso, anything from your side? But Of course, we will have fluctuation, but these are 2 segments that should generate good margin also moving forward. Once again, pretty much spot on. Then maybe just a brief note that we have been slightly benefiting from the COVID on the cost side or not being able to travel in the phase earlier, but at the same time, especially when we talk about energy now, we also see that when the traveling. It's not possible we are hit on the revenue side. So our execution capabilities, I'm really happy with. And then Once the new world emerges, probably we travel a bit more, but at the same time, we generate the revenue on the top line more. So I would say that we are happy And if you remember, when we merged or when we joined forces with Peruvian OF, the 2 segment that was really fully effective from that was process industry where we took the OF Process Industry Pulp and Paper, but also joining, of course, with a very strong Pei. And that has created a world leading division into Bio Industry, for example. And also Energy, we took a lot of advantage of joining forces together. And as we planned, these two segments have delivered strong margins and good business, and that's what we will continue to push for. So The expectation internally is that they will continue to deliver really strong and good margins and growth. Thanks. So next question. Given the high demand with the Industrial side, do you feel that you should be able to raise prices? And how is the salary inflation? Yes, we talked about prices. And yes, I would say prices has a complex theme, but of course, we will do everything we can to work on the pricing, but also on our offering, meaning that if you can really explain to your clients what kind of value you are delivering moving into more project model. Of course, we will push everywhere we can. And then I would say on the salary inflation, We have not seen any bigger change on the salary inflation than normal. I don't know if Jussi, if you want to say something about inflation, but nothing that sticks out at all. No. At the moment, I don't see any material movements on the market. And maybe just to remind the analyst and investor community that Our capability to both adjust the revenue and adjust the salaries or let's just say that pushed the salary inflation towards pricing has been quite strong throughout the years. So this is not the topic, I mean, mid- to long term worries. And at the same time, we need to remember that, like Jonas said, the key important factor is to provide value for clients. And we have seen that especially when there's scarcity of resources, clients are willing to pay For that value that we can deliver. So that is the most important part. And then the second part is that should there be salary inflation, Our capability to fight, it is strong because it is up to us also how we deliver the value to clients. So basically, we can have different type of mixes in the teams and so on. So, it is a topic that is part of our business, and it's something that at least I feel we have been quite good to work with and have a good track record also. And the last question then from Johan Sundin. Should we be bored regarding increased vacation takeout during H2. Worried? Yes. Yes. We are monitoring the vacation planning quite rigorously, but this is nothing that really varies. I think people have take some well deserved vacation, and we have good plans for the vacation ramp down as we are in right now, but also the ramping up after vacation. So Nothing that really varies, but of course, something that we need to monitor in general as we do every year. And then we have three questions from Dan Johansson. So you mentioned that you plan to ramp up in recruitment during Q1. Have you been able to find Q1 is new hires and how much is related to recent acquisitions? Yes. I mean, in general, I would say, good questions. As always, it is kind of a hunt for the best competence right people. I will say, so far, we are able to attract good people to Efri. So but we need to continue to offer really good assignments to employees. We need to offer good interesting projects and also strengthening Aifree as a brand helps us in attracting good people. So, so far, I would not say that we have been hampered on the growth side due to people. And as you know then, we are now starting to be more and more brave in hiring people to make sure that our supply is getting strong. We comment the salary inflation. I think we keep that under control, so we don't see new salaries affecting us in any ways. And the third one was a bit what was that? Remind me, Catherine, the last comment from was How much of the increased net leverage Compared to Q1 is from new hires. So for sure, with all the acquisition we have done, part of the increase has been driven from acquisitions. And I don't know the split now. Do you have that the split between acquisition on headcounts and new recruitments. We have basically grown roughly 600 employees from quarter 1 to quarter 2 and 300 to 400 of those ones are coming from acquisitions And then basically 200 to 300 from recruitments. Yes. So, with fifty-fifty maybe. And of course, When we recruit, that means that we also, of course, we are we have attrition also every quarter. But So far, I think the momentum and feeling we have is that we are able now to start to hire people and adding the acquisitions that in general, we are filling up our supply with good people and meeting the demand on the market. So group wide initiatives with the ERP, A3X, how do you see it evolving going forward? Will it ramp up further or stay at these levels over the coming quarters? Yes. I mean, as you also said and we have also communicated since quite time. We have decided to do the needed change in our system platform. It's the ERP system, it's the CRM system we have implemented, we have implemented new HR system. So that part, I think, Jose will comment, but we will continue to see that maybe on the level we see right now and then fading down. You also explained also a bit on the facility side that we want to allocate empty premises centrally to give a good and for the divisions and units to move into the new way of working. And then we have the digitalization, including A4X. And I don't think we will not see that getting on a too high level. But at the same time, we will invest and partly reallocate digital competence into the A3X Accelerator because we have a strong belief that we will do more business in SARS models, software as a service and so on. But I don't think we will not get to high levels. There's no plans that these numbers will go skyrocket. We have created a very strong lean platform during last year, and we will keep a good eye on that, as Jussuf said, that we have good cost control as a group. I don't know, Jussuf, if you want to add to this. It's your one of your favorite topics. Yes. No, I think you were once again, Scott, on basically, we have the 2 topics. First of all, I'd like to say that we do not stop investing in the digital. So, obviously, we will have A3X, the cost component. But the further we Go forward on that one. There's also the revenue component, which will be divisional revenue as A3X is not an external segment. But at the same time, that revenue generated will also push costs out from the group comment on that part. So Now I would say that we have ramp up phase on that one, and that's now visible in the group. Then on the ERP, we have gone live with that one. In the pilot entities, we will continue according to plan. And also on that one, we have a bit of ramp up expenses. But the further we go on that part, then the more we start to see also the efficiency gains and the improvements in our operations. So all in all, I would say that Yeah, in a fairly good position and the costs are under control. So next question. How do you see demand developing within your food and pharma offering going forward. It has performed very well, and you seem to continue to take orders. Is it possible to maintain double digit growth within that part of your offering going forward. Well, I think in general, we have a positive view on Food and Pharma, Food and Life Sciences. As we see it, and it's something that we also want to invest more and we want to take on bigger and bigger projects. Then there is a seasonality between quarters as always. But in general then if it's on the growth side that we have had or but I would say, in general, we invest and believe in strong growth in the Food and Life Science or Food and Pharma moving forward as well. And you are right, we are taking some really good projects now, like the one we highlighted yesterday, I think, in Denmark. Yes. And then we have a final question from an additional question from Erik Paulsson. The level of depreciation went up in the quarter. What do you expect the level in terms of a number to be for the full year of 2021? I think this is a perfect question for you, Jussow, depreciation full year 2021. Well, as we have not guided the other numbers, we will not guide the full year numbers. But obviously, from the quarterly report, you start to get the glimpse on the ERP depreciation. So the current quarter, I think it goes slightly still up as we go forward, but then it stabilizes on those Okay? Thank you so much. There are no more questions. Okay. So thank you guys for bearing with us with these technicality challenges, and we will make sure that quarter 3 webcast presentation will be super solid when it comes to technical setup. Really happy that you were able to post the questions and we could answer them. And again, summarizing Efrae, it's a quarter which we feel has been a step forward to get the growth numbers as we hope for. We will continue to invest in our digitalization. No question about it. There is a strong team that we can also support our base business with a lot of new recurring revenue models. And then, of course, the sustainability transition we see, We feel that we are well positioned for the second half year that we are looking forward to. So, thank you again for taking the time and listen to us, and we wish you then a fantastic, safe, but also a great summer. And looking forward to see and talk to you soon again. Thank you so much.