Earnings Call: Q3 2018

Nov 8, 2018

Thank you, Andreas. Good morning, everyone. Welcome to the presentation of Atendo's third quarter results for 2018. This is my first quarter as the CEO of Atendo. I'm very excited about my new role. I'll pay to Atendo on what the company has achieved in the past. Given H. Demographics an upcoming need for new capacity, I also believe that our biggest growth opportunities are still ahead of us. I spent much of my first time visiting units and meeting customers and employees across the company. And I must say I'm very impressed by the commitment and entrepreneurial spirit we have in Atendo on all levels. Society is facing large challenges in relation to social care, and I see that Atando has an important role to play in this area. Right now, having more capacity than ever before, thereby providing local authorities with services that enable more people to get access to modern and high quality nursing homes. We foresee that we will maintain a very high opening pace in 2019. This is fundamental to strengthen our market position and fuel organic growth and building shareholder value long term. At the same time, the high opening phase will continue to put pressure on margins short term while allowing for increased profit growth. Our absolute ambition is to be at the forefront of improving the quality of care, establishing new operations and to solve important tasks for the local authorities across The Nordics. Now I will turn to the presentation, starting by presenting the results in brief and by sharing some business and market highlights. And then Fredrik Lager Krans, our CFO, will take you through the numbers in more detail. Next slide, please. We had a very high activity in 2018 with a record number of openings and construction starts. For the third quarter, net sales amounted to SEK 2,800,000,000.0. Growth was 21% adjusted for currency, a result of openings in recent quarters and acquisitions. Organic growth amounted to 4% and will over time increase as more beds get occupied. Operating profit EBITDA amounted to $297,000,000 kroner corresponding to a margin of 10.6%. Both acquisitions and improved occupancy this year in units of which were under start up in q three last year contributed positively to profits. We have also improved performance in our Home Care operations in Sweden. This is a function of improved planning and process work in combination with tactical acquisitions the past year, increasing customer density in our home care operations. Profit was continuously negatively impacted by costs for opening up new units. The loss from ended outsourcing operations was larger than earnings generated by new outsourcing units and this trend is expected also in Q4. Denmark is still a loss making area, but the losses were lower versus previous quarter. They have stabilized the development in individual and family, but results are still slightly lower versus last year. So the margin for Atendo as a whole is lower than twenty seventeen. This is a consequence of high start up costs and the acquisition of Mickova in Finland, which has clearly lower margins than Atendo as a whole. We reported a cash flow, operating cash flow of SEK 186,000,000. And as previously announced, we're in the process to divest Atendo's healthcare operations in Finland. The competition authorities process to review the transaction has been slightly delayed, and we expect the closing to be around year end. Next slide, please. So let's take a closer look at our contract models. You can see that the quarter reflects continued growth in all operations. Net sales increased by 34% compared to Q3 last year. The increase is mainly explained by acquisitions, but also from new nursing homes and higher occupancy in units that were under startup during the corresponding quarter of last year. The largest part of the sales growth in own operations is derived from the acquisition of Mickova, which was consolidated into Atendo in November. During the third quarter, we opened 12 new owned units with a total of three nineteen beds. This is lower versus previous quarters as we prefer not to open homes during the summer months, and we expect a higher number of openings in Q4. Now turning to outsourcing. Outsourcing accounts for 20% of sales in Atendo. It will decrease as part of the group as we are growing in own operations, but it's still of strategic importance as many local authorities start using outsourcing as the first step to increase freedom of choice. Net sales in outsourcing operations increased slightly due to currency and contractual price adjustments. And looking at the results of tendering processes in q three, we lost contracts of an annual sales value of SEK 60,000,000. In Q4, we expect the drop in revenues for outsourcing, some from larger contracts will expire with a combined annual sales of around SEK200 million. But over time, we expect the outsourcing business to be stable with slight growth potential, while it can show some revenue volatility short term. Next slide, please. This chart shows the rolling twelve months opening phase. As I just mentioned, we opened three nineteen beds in Q3 isolated, which is significantly lower versus previous quarter. The number of open beds rolling 12 per end Q3 was close to 2,500 beds. This is more than 60% higher than the same period last year. And this is a fundamental driver behind our organic growth and future value creation. The high number of openings has an impact on profit and margins. Before we reach a sufficient occupancy, opened units are loss making. Also, with increased and currently very high activity in the market, the expected time to reach full occupancy has increased from earlier twelve months to around eighteen months. Many openings also mean higher demand on the organization to sell more belts. We're putting more efforts to sales and marketing, and we're pleased to see that we have never been selling more beds on a twelve month basis, while still below the exceptionally high opening rates. On the right hand of the slide, you can see some photos homes opened in q three. The photos of the lower right displays a new day center for people with disabilities. And this is an example of our vision and practice to empower individuals, in this case, through providing disabled people with meaningful work in a bed and breakfast operate operation for external customers. Next slide, please. At Thunder now has more than 15,300 own beds in operation. This is an increase by almost 50% from the corresponding period 02/2017. We have continued to find new opportunities, and we started construction of 13 new units in q three that will add more than 400 new beds. In total, we have more than 2,500 beds under construction by '3. This is a slight increase versus previous quarter or lower versus the same quarter last year. We're also clear market leader in Nordics in terms of a number of beds in operation and in terms of ongoing ongoing projects. Next slide, please. So let's now turn to the overall market trends. We continue to see strong interest in our operations in both Sweden and Finland. The outsourcing market in Sweden was stable in the third quarter. Volumes up versus last year in care for older people, but slightly lower for care for people with disabilities. At the end of half had a high win rate in 2018 year to date. In mid September, elections were held to the parliament, county councils, local authorities in Sweden. While the financial political constellations in the national parliament and in many local authorities are still unclear. However, on the overall level, pro private parties have increased their voter share. At Thunder believes that the discussion regarding profits and welfare services will be less significant at the national level going forward and that the election outcome could over the long term mean increased opportunities for new corporations at local level. In Finland, the public sector needs new solutions to get access to new capacity and replace outdated facilities. We have seen higher interests from local authorities to divest outdated nursing homes to private providers in order to get access to modern care homes and to secure local services and local jobs. For example, in the turn of Q2 and Q3, the municipality of Imatra chose to sell several care facilities to Atendo. And with that, I hand over to Fredrik for a financial review of the quarter. Thank you, Martin. As you remember from last quarter, all figures related to the income statement are presented without the healthcare operation in Finland unless we state otherwise. So if we then turn to Page seven, you can see that the net sales continued to be strong. Total net sales amounted to NOK 2,800,000,000.0, up by 26% compared to the corresponding quarter last year. Adjusted for currency, net sales increased 21%. Acquisitions contributed with approximately 17%, an effect from the many acquisitions made during 2017, of which MiKeva being the largest. Organic growth improved to 4% in the quarter and is over time expected to increase due to our money openings. You should bear in mind that net sales this quarter is still negatively affected by the closed units within home care and the individual and family care business. In the fourth quarter, we expect less positive sales growth from M and A. This is a consequence that the Microm acquisition was consolidated into Atendo already in November 2017. Atendo will also lose sales in the outsourcing operations in the fourth quarter due to some large contracts that will expire in the coming quarter. EBITDA amounted to SEK $297,000,000 in this in the third quarter, slightly up from last year's SEK $277,000,000 and with the margin of 10.6. The margin has declined compared to last year and especially both by the large startup costs and by Mickiewak coming in with clearly lower margins than Atendo. I will come back with details on the underlying EBITDA development on the next page. Financial net was negative SEK 35,000,000 compared to negative SEK 21,000,000 in the 2017. The higher interest expenses are explained both by higher debt and higher interest margins after the Mitra acquisition. Income tax for the quarter was million, which equals a tax rate of 24. The higher tax rate is mainly explained by losses in the Danish Home Care business and to some extent of a lower share of remaining business in Finland. Net profit from continued operations amounted to million in the quarter, which equals an earnings per share after dilution of SEK16. Slide, please. As seen on the previous slide, the operating profit for the quarter was up SEK 20,000,000 to $297,000,000. The largest profit contribution continues to come from our acquired units where main part relates to Mykiva. We can also see that the number of units now entering into a more mature phase is increased is increasing, which has a positive impact on profits. We are also pleased to see that our strong efforts to improve profits in our home care business are now paying off. The home care market is highly dependent on a good customer density, something that we have worked with both through tactical acquisitions, but also by closing down units lacking good prospects for future growth. Looking at items pressuring our profits, we see the large impact from startups and the negative balance from started and discontinued outsourcing units. We have had a very high opening pace since the 2017, which has put a substantial pressure on the profits. The openings rolling twelve months are now declining from the peak level we experienced in the second quarter, but still at a very high level. Going forward, you should bear in mind that the overlay pace is expected to remain high with continued profit pressure as a consequence. Long term, we are confident that the units that are now pressuring our short term profits are laying a strong foundation for future profitable growth. Before we turn the slide, I also want to give a few comments on the fourth quarter. We expect positive impacts on the units that were on the start up last year. Openings will at the same time have a continued negative year on year effect. We expect the fixed headwind from outsourcing units that expires, and we also have a negative calendar effect compared to prior year. Next slide, please. On this slide, you can see the complete cash flow statement. I would just like to make a few comments on cash flow. First, bear in mind that the cash flow includes the health care operations in Finland. Cash flow from investment in real estate projects was slightly negative in the quarter with a negative 59,000,000 kroner. This is due to that the summer is an active time for construction projects. Overall, cash flow from real estate investment has been positive during 2018. Net debt amounted to NOK 4,700,000,000.0, which equals a net debt to EBITDA of NOK 3.8. Excluding the closedown cost, net debt to EBITDA amounts to 3.7 in line with Atendo's financial targets. With the proceeds from the divestment of the healthcare operations expected around the year end, the net debt level will decline substantially. With that, I hand back over to you, Markus. Thank you, Verdict. Next slide, please. We strive to ensure that all of our customers should feel safe, involved and independent. Achieving this requires systematic quality improvement as well as a competent and value driven increase. I'd like to give some examples of activities carried out in the units during the third quarter. This summer was characterized by the unusual and long lasting heat waves. We know from experience that heat waves could influence comfort and health for our customers. During this period, we took actions both on central and local levels to prevent dehydration and other discomfort for our customers. And as a result, we didn't see negative deviations during the period. In Finland, we're trying out new ways to present our services. One example this quarter was a pop up nursing home at a shopping center in Fori. The space in the mall was furnished exactly like in a Tandem home, where shoppers could peek in and get a sense of Attendo's available lifestyle concepts. For the second year, Attendo Unika in the Stockholm area was nominated for the Lead the Way Award in the Employer of the Year category. The award is given by the state owned company Samhalle to persons who strive to integrate people with disabilities in the labor market. Atendo Finland has awarded the Nurse of the Year within Care and Healthcare and the Innovation of the Year, which was granted to the new Mothers Dental Box, a package of dental care products for expectant mothers. And with that, I would like to conclude the presentation. The result in Q3 was slightly higher in absolute terms versus last year, but with lower margin as a consequence of the many units and startup phase. The openings will also remain on a high level in coming quarters. Next year, the new accounting standard, IFRS 16, will be implemented. In connection to the year end report 2018, we will present the impact on the P and L and balance sheet for Atendo. At the same time, we aim to present updated financial goals for the group reflecting the new accounting standard. Atendo is a clear market leader in The Nordics and has a strong foundation in terms of culture, quality of employees, and ambitious plans. At the same time, we must continue to challenge ourselves to get better and never settle for good enough. I'm very excited about the future journey and looking forward to develop the company together with my 24,000 colleagues. Thank you for your attention. Over to you, Andreas. Okay. We'll now open up for questions. And please take one question at a time. Operator, please go ahead. Now first question comes from the line of Christopher Ljeburg from Carnegie. Please go ahead. Your line is now open. Yes, thank you. Is it possible to give the figure for the impact on for the net impact from Homestead or in startup phase, the one you said were minus 50,000,000 in in the second quarter. We usually don't give that exact number. I don't think we said exactly 50,000,000 in the second quarter, but that's roughly where we were. It's it is lower this quarter, and that's a consequence also that we see, as you can see, the the number of beds opened over the last twelve months is is lower. So it it's it's somewhat lower this quarter. But do you think it will, become higher again the coming quarters, given what you you said now? Or, should it continue to decrease as you see also more, those homes getting profitable? One thing is to bear in mind that this is this is the absolute cost of the openings or the new openings. It's not it's not the net with the kind of profits we get from ramp ups. And then one thing is the volume of old units and beds we open. But then also project and unit has a bit of different, you know, local market prerequisites, so they can fill up differently. So it's not that you exactly mathematically can say how every activity will develop exactly the same. So it is dependent on the local market conditions. But over time, it should follow the amount of open bets. But if we take, since the effect was done lower in the third quarter than than the second quarter. So for modeling, purposes here going forward, should we expect if if you look at the total net effect with the positive contribution from, you know, rooms that are filling up and becoming more profitable. At the same time, you have, a lot of of starch. Do you think that type of net effect, do you see that will now continue to be gradually smaller, or could it be in the short term, a larger negative impact again? Over time, it gradually should improve as as, the total amount of openings are declining somewhat and and at the underhand, we get more and more positive contributions from from ramp ups or or the units that were in start up one year ago. Then to predict a specific quarter is very hard, but over time, that balance should improve. And and, you know, just looking at the stock of units we have under construction, we predict that in looking at the next year, number of openings will be lower than 2,018, somewhat lower. But do you think it's a fair assumption to to assume all the more there will be pressure, but because of the higher sales that you will be able now to continue grow earnings year over year? No. I you know, we don't give specific guidance for 2019, but what we see is that the current opening pace is pressuring margins, which makes it hard to increase the margin to short term to our long term target of 9%. Okay. Thank you. Thank you. Our next question comes from the line of Mikael Holm from Danske Bank. Please go ahead. Your line is now open for your question. Yes. I have two questions. The first is if you could say something about the average revenue per bed in Sweden and Finland to help us get a feeling for the occupancy levels in the two countries. Yes. Okay, Mikael, I'm not sure. When it comes to the first question, as you know, there's significant difference between the Finnish and Swedish market when it comes to revenue per bed, while as you know, margins are not that materially different. And in Sweden, an average bed are roughly on the range of SEK 2,200. And in Finland corresponding figure would be a €135 per bed roughly, given indication. And and we don't give out occupants as you know, but you can just, as you see as the whole system, we're opening up very many more beds in Finland. The occupants is on average lower, but in mature units, we are about 90% in in both countries. I mean, if I have the the average revenue per bed in Finland, I guess I can calculate the occupancy as you give out sales for own operations or if there's something I I would miss then? No. I mean, you can give an idea about it. Yes. Yeah. It was a mix effect. The majority of our operations are within elderly care, but then we have disability care, which tend to have higher revenue per per twenty four hours, and then we have social psychiatry care, which tends to have a lower reimbursement from the public system. So so and also when it comes to beds, it's different to outsourcing. You don't have the rental component, for instance. So so it is quite tricky to do that. But quite a cost of gains and indication, yes. Okay. And my second question is regarding Sweden and a change in mix on where you build new units. Historically, we can see that most new units have been in municipalities with this low system, while you're now building more in municipalities with more frame agreements. Could you give some more color on this in terms of, I mean, positives and negatives with this shift in terms of new openings? Well, we don't see it really as major shift because we are, you know, interested to building new units in the local authorities where there's a shortage and where there's a future need It could be in in freedom of choice, municipalities, LOVM, what they call the Swedish. But also LOVM you know, quite common and it's more dependent on on the local situations. And we are analyzing basically all municipalities in Sweden to find opportunities, and there's no clear trend here on how we are thinking on that. If you would say something about the general pattern of policy and a freedom of choice system, we are a bit more exposed to price risk as the price is more set for the local authority. But we can more control the occupants as we can attract customers through them a bit in a a in a more independently. While in a in a frame of agreement situation, we are a bit more we have a bit more, opportunities to to work with the price level. However, of course, we have a bit more dependent on how the local authority are, managing the queues. So there's no, I mean, difference as a as a margin historically or what you see as the future potential? Margin, could differ a bit from municipality, but there's no, clear path and all that. Differs very much from region to region, and that's part of our model really that we are diversified and we are finding all opportunities where we can. Okay. Thanks. Thank you. Our next question comes from the line of Hans Bostrom from Credit Suisse. Please go ahead. Your line is now open. Good morning. Three quick financial questions, please. I see there are some quite considerable movements in your amortization of intangibles in the third quarter compared to recent quarters. Is this because of acquisitions? I mean, I'm not sure that you have made such so many acquisitions to justify €10,000,000 quarter on quarter increase, but could you explain that? Secondly, your interest margin on my calculation appears to have risen as much as 140 basis points on last year, which obviously seems a huge increase. I mean, that might be slightly distorted by average debt levels, but still, it seems to be more than 100 basis points. Is this really the case? What the other financing costs involved in the finance net that we should be not seeing as recurring? And what will happen to this borrowing rate when you have sold the Finnish operation? Are we safe to assume it will go back to where it was? Or are you still going to be at a much higher rate than you were in the past in terms of and I suppose there might have been movements in underlying rates, but if you talk about margins, that will be helpful. And third point relates to your comment on tax rate, which appears to be partly relating to issues in Denmark, but there was also a comment about Finland being a lower share. Would you have been kind of in the 21% region in the past before these nonrecurring issues started, but is that a sensible level for the future? Or will you be at higher rate? Thank you. Arthur, there's very many questions, but let's take them one of them. Starting with the question on amortization. And the increase year on year is primarily due to the Mickeam acquisition. Well, that was already effective from the first quarter, and there has been a 10,000,000 increase. As far as I can see, unless my numbers are wrong sequentially. So you are so you are okay. Then I need to look again because I was answering year on year development. If we take interest margins, when we get when we have increased our borrowing as a consequence of the Mick of a primarily as a Mick of acquisition, That impact, as you say, both the debt level, but it also impact our, interest margins that we pay because that is based on on the leverage rate. So so it's a combination of higher debt and higher interest margins. But how I mean, can you comment in terms of how your terms, given I presume you have breached some form of covenant that is triggering this increase in interest margin and presumably you are We not breached any covenants. We have a margin ladder that is depending on our leverage. Our, you know, our borrowing has increased if you compare it to one year ago quite significantly. And that drives both the amount of money we are borrowing, but also the margin we pay on the full amount. Then we should remember that following the the closing of the divestment of the Finnish health care operations, now around year ends, borrowing will go down again, and that will impact also the net financial, the financial net. Yes. But could you quantify what types of swings in borrowing margin we're talking about? Because these swings are truly significant in the context of this company or any company for that matter. No. But I think, you know, if you look at our current financial net and calculate based on our net debt, you you get fairly close to what we pay in interest margin. It's it's just current leverage, it's a bit north of 2%. And and that that goes down significantly. I I don't wanna I don't wanna comment specific on exactly how our financing agreement looks, but it is it is, you know, the interest margin goes down significantly as we go down in in borrowing. Auster, we didn't get the third question really to you. Can say that again? Well, you did you did talk about the raised tax rate being a function of the Danish losses. I presume that the non tax deductibility there, but also shift of business away from Finland. Yes. It's as we expressed the tax rate now, it's for the remaining business. And and since the health care operations in Finland is in Finland, and Finland has a lower corporate tax rate. So when we exclude that, when we're commenting on the tax rate, we get higher share of the business mix in Sweden, which has a slightly higher corporate tax rate compared to Finland. So there is no element of sorry, there is no element of nonrecurring items that impacts the 24% also tax rate is an underlying tax rate for the business as it looks today? No, it's the main reason for the high tax rate is the losses in Denmark that we cannot deduct from a tax perspective. But the long term perspective, should, you know, looking at the 20 and the 22% we have in Finland and Sweden as tax rates and good, good proxy of the long long term perspective of what our tax rate should be once we have turned Denmark around to make profit. Okay. I appreciate if you come back to me regarding the amortization. Yep. Yes. To me, it looks like that the amortization in the third quarter is very similar to the second quarter in 02/2015. Okay. I had the wrong information. I think it's the difference 1,000,000 kronor only. Okay. Thank you very much. Thank you. Thank you. Our next question is a follow-up question from the line of Christopher Ligerberg from Carnegie. Please go ahead. Your line is open. Yes, thank you. Actually, two follow ups. Could you comment on the average time to fill up the homes, that has continued to increase or if it's stable now? And the second question, your statement here about the contract management, the sales in in q four, you mentioned lost contracts in stock of 200,000,000, but I guess you have also had some wins. So is 200,000,000 a net effect? How much lower this would be in '19 or is that less? Thank you. Yeah. So if I start start with outsourcing contracts, so these are contracts that we, you know, have known for some time that they will end. And, we announced that a couple of quarters ago that we lost the contract. But now, it's actually, the the kind of finishing time is approaching here in in q four. And and 200,000,000 is the annualized sales impact, and that's a a good, you know, that's a good proxy for what will happen in the fourth quarter to use that number. But then moving into 02/2019, there are other contracts, coming starting up as well. So it's not 200,000,000 on the on the full year basis for for 2019 negative. So what do you think, the negative effect would be in '19? We don't give that specifically. Okay. And and in terms of fill up fill up time and and how quickly we fill the homes, and we can't reiterate what we've said before that, you know, every market is very local. It depends on, you know, what's the shortage when we open in the municipality, where is the biomechanism. Biomechanism? Is it freedom of choice? Or is it a framework agreement? So it is different from unit to unit and market to market. So to be very specific, you know, on what we expect for the next quarter or what we see exactly now, we cannot be that specific because it varies. It depends on if we this quarter has many things opening in Finland or in Sweden and so forth. But what we can say is that overall, we've seen average time to reach a full house has increased from the twelve months we used to talk about, and now it's eighteen months. Okay. But but you don't see that? We don't see it worse than we talked three months ago during the summer. They are at the same level. Okay. Thank you. Thank you. Our next question comes from the line of Karl Johan Vonnegiew from DNB Markets. Please go ahead. Your line is open. Yes, good morning. I just wonder if you could help me with if you look at the 15,300 owned beds you have in the own operation, how many of those would you consider be in this kind of ramp up till the mature units coming up to the 90%, occupancy level? Yeah. They changed the view a bit on how long time it takes to, to fill them from twelve to eighteen months. Yeah. But we've had to to assume that about two thirds would be in the in full and then we're kind of targeted documents at this stage. They are more. It's north of 10,000. That's it's it's mature. Excellent. And just on the calendar effect for q four, can you give some indication for it? Because obviously, depending on our Christmas falls, it could be a huge impact. Yeah. We have estimated the impact somewhere between 10 and 20,000,000 Swedish kronor for a group. On the revenue level? No. On profit level. On profit. Thanks. And It doesn't impact our revenue so much. It's our cost that is higher. Of course. And finally, looking at Nikkeva, obviously, there was an integration and earnings enhancement case here. You, to some extent, to to charge off there. How has that developed today? Integration has been going to plan. We have now spent almost a year on it. While it takes time to to increase profit levels, let's say that's significantly lower than than it was not on the whole, and it's what level is is almost similar level. Still, at at points like one of the versus points of acquisition. So and we have we have some units that were more challenging than we thought. Then, of course, two of the biggest factors when when improving the business is starting. We're starting to work with. It's also lease agreements. It just takes longer time. So we're working hard with that acquisition. We said that we believe that we will improve it. The initial acquisition, and we will improve the margins over time, but it's a hard work doing it. But your total scope that you should be able in due in due course to get it up to to your finished level, so to say, old legacy level in Finland, that should be still a fair assumption? What we said is that we should get it in three years overall at hand the margins and that we're still committed to. Excellent. Thank you very much. Thank you. Our next question comes from the line of Riccardo Rommieci from One Investments. Please go ahead. Your line is now open. Hi. Thanks for taking my question. I have one question on your own operation business. You talk about closing some a number of homes in the quarter. And I was I wanted to understand if some of these homes are being renovated and will reopen, how many of these homes, on the other hand will be closed, how big the number is, and, in what geography are we are we talking about? What we talked about is that we have closed the number of units. That has primarily been one one thing we do done is we closed the number of home care units, and which is when we provide services at the clients' homes. And that's because those that operation is so it's so important to have a good customer densities. We cannot work on two with two levers there. One, doing technical acquisitions, but then also close down units. But that's kind of not closing any facilities we've had. Otherwise, it's it's within iOS that we have closed units, and that is integration care and and individual and family cares. And and and third, thirdly, we closed some it's some outsourcing contracts that's that's been, we've been exiting. Okay. Because you also talked about a number of clients being moved elsewhere. So so I was just wondering if some of this I mean, what was generally the the impact and also the the closing whilst some operation were phased out entirely? Just No. In what's Finland, sometimes we have moved clients to more modern facilities. Has been more of, you know, moving operation. It's not closing down the the operation as such, but we closed the the old unit because we have a new more modern facility in the area that we want to utilize. Okay. Okay. No. That's good. Thanks. And that could be as a result of some acquisitions we've done as well where we consolidate operations to more modern facilities. Okay. So that goes to the optimization of the utilization of the of the footprint that you have now. Okay. But that it's it that's quite limited still. Oh, Thanks. Thanks a lot. Thank you. Our next question comes from the line of Hans Boldstrom from Credit Suisse. Hans, your line is now open for your question. Yes. Just a follow-up. The 300 odd beds you opened in Q3, which obviously is a considerable step down from the last couple of quarters, was it? Is that a reflection of the summer months or is this a sort of more premeditated slowdown as you absorb the recent capacity additions? How should we think about that and how this number will develop in the coming quarters? We have learned that it's better for us to be a bit slower in openings during summer months, given that it's harder to get new or fill up the house early on in the middle of the summer. So that's a deliberate choice that we we tend to open in a slower pace in the in the summer months. So that will the the open pace will go up again in q four. So we're back up to 900, or what's your what's your thinking on that? No. We're not back to 900. If you look at the, number of on that note in or number of beds under construction, it's roughly around 2,500 beds under construction currently in Q3. So and if you look at the rolling pace as well, twelve months, you can see that that's so the average opening pace per year. So on average, we we will probably be opening around 600 homes per quarter. Now it's been it was considerably higher in Q2. It was considerably lower in Q3. So you can expect a sort of more normal number in Q4. Okay. Thank you. You. And as we have no more questions registered, now hand back to our speakers for any closing comments. Okay. Thank you all for your participation. Our Q4 or year end report will be released on the February 14 next year. And we look forward to speaking to you at that point in time. So by that, we conclude this conference call. Thank you.