Earnings Call: Q1 2021

Apr 29, 2021

Hello, everyone, and welcome to the presentation of Fager Group's Q1 Interim Report. My name is Michael Brewer, responsible for Strategy and Communications here at Fagel Group, and I will be the moderator here today. On the call today, we have our President and CEO, Budde Sorenson and our CFO, Michael Wood. Compared to our last quarter in February, we have outlined the presentation a little bit different this time. Rodolf will I'll start with a brief update of the Q1 numbers and then spend some time on what we see happening on the market, the trends we see for the future and how we are positioned to benefit from these opportunities going forward. Michael will then give you more details about the financials for the group and our business areas. And finally, Bode will conclude with a brief overview of a few key initiatives. Afterwards, we will open up for questions. We'll first allow questions from the conference call and then we will allow questions from the webcast. The questions posted in the webcast will be read up by me, for Bodil and Michael here in the audio call. Before we start, let me also remind you that today's session is recorded and will be available on our homepage later today. With that, I hand over to Bodil. Please go ahead. Okay. Thank you, Michael, and Thank you to all of you that's present on this webcast today. And as Michael said, I will start with a brief overview of the numbers and then look into what we see happening in the market. So first, let's look at the quarter. So we continue to see progress in the market, even though we all know COVID is still around us. And I would say that the geographies that had a tough How last year, like Southern Europe and the U. K, are recovering. We have, for example, seen no negative effect of Brexit in the U. K, rather the opposite, where the clarity of direction seems to be helping in decision making. We were very happy to see an improving operating margin to 9.1% as a result of an, I would call it an okay sales level, a good GP margin and a reduced cost base. And you know we had said this in this all year, and we continue to have Very good cost control. In the beginning of April, we acquired the remaining 80% shares in Soneco. We have been colorating the last 5, 6 years and acquired a 20% minority stake in 2017. And I would come back to some more details about that later in my presentation. Also, as Reported last time, we continue our group projects on core values and sustainability, and they continued with good progress in the quarter. And like everyone, we have a strong focus on the current supply chain challenges in the market. We have not Seen any negative effect on the sales in Q1, and we see the situation is going to be continuously challenging. All of the group companies are working together in a very good way, and we are quick in decision making. And we also have a strong long term relationship with our key suppliers, which helps us in handling the situation. So Q1 in 2021 in figures, and you see some key numbers for the quarter and also comparison to last year. We had a comparable decline in order intake of 7.4%. So the steady trend continues back on track. And also, Q1 2020 It was quite a good quarter from an order intake perspective as COVID began to impact only at the end of the quarter for comparison reasons. And we did net sales for an organic growth of 6.6% compared to last year, and we reached SEK 1.6 SEK 7,800,000,000 Operating profit was SEK 152,900,000 with no adjustments. And this, as I said, was a big improvement to the last year's results with our operating margin of 9.1% this year. Earnings per share was SEK 0.63, and Michael will come back to you with a few more details when he looks more on the numbers. So looking into what's happening on the market, I'm not going to go back to our Development in 2020. But I wanted to show you a brief overview of the latest market statistics from the research institute that we're using called CECL that was released last week for the European market for 2020. And the European market Lighting last year on the Professional side declined with 11%, which is in line with our development. There was a big difference in both geographical markets and application areas, which is also in line what we reported all last year. The market where Harder restrictions and lockdowns were implemented, if you can study Europe and UK. So a higher decline last year and numbers were better in Northern Europe. And the most difficult application areas last year was retail and culture, for additional retail, whereas Industrial Applications performed much better. So If we look into a little bit beyond the COVID pandemic and what we see as a market potential is, of course, increased Interest in Sustainable and Energy Efficient Solutions. So across many markets and regions, The new regulations and initiative to drive sustainable change. For example, we all know the EU Green Deal with the renovation wave initiative, and we also see similar initiatives, for example, in the UK. If you look at the worldwide numbers, Lighting is estimated to account for up to 15% of the global energy consumption in the world. So the impact of energy efficient lighting is significant. So our offer here is to focus on high quality lighting that reduces energy consumption and at the same time increases people's well-being and safety. So we We believe that this will be an important part of the solution. The illustration you see here shows the potential energy savings bought by new technology. And the change from conventional lead that start conventionalizing to lead that started 10 years ago brought significant energy savings. And now we add on also new connectivity solutions to the installation. The energy consumption will be further reduced. So I will explain to you how we see that happening and the reasons behind it. So as I said, the change from conventional to LED lighting started about 10 years ago. And regarding sales volume, led Lumenel quickly took over. But in the market, There is still a large installed base to be changed. And looking at the installed base, it's on average 30% LED lighting installed across the European markets that you can see illustrated here how it's changing. The situation in North America shows an even lower rate of installed led luminess. And here again, the installed base varies from higher shares in retail and outdoor applications to lower in office and healthcare applications. And there is a similar trend in geographies where the base of lead luminaires in higher in North and Central Europe and lower in Southern and Eastern Europe. And in order to accelerate the change, we need more renovation. So with the ongoing upcoming sustainability initiative, This brings a good opportunity for the coming years, both from a market opportunity perspective, but also for us to contribute to a more sustainable environment. So besides focusing on energy savings, We also aim to provide our lighting solutions in a sustainable way. So you know our new vision statement from last year that highlights our ambition. Together, we innovate to deliver professional lighting solutions that are circular and climate positive and contribute to better life. We already today only Factor and Cell Led Lumina with high energy efficiency. In the market, we also see an increasing demand from our customers to better and how and where our products are manufactured. And as you know, we have 17 factories all close to our customers. To make sure we capture the opportunity and to have the right attention and focus in the organization, we have appointed a Chief Sustainability Officer to further develop the group's sustainability agenda. And on the right hand side of the picture, you can see 3 Positive examples from the group. 2 of our brands are Ekovadi's silver awarded since last year, which is an external recognition of their sustainability effort. And as I mentioned last time, White Cross has launched the group's circular products on a new circular product platform called Vitality and where many more products will follow. And also across the group, there are multiple initiatives to reduce our carbon footprint. As examples, On the picture, you can see solar panels on our manufacturing, and this is from our original factory Fagelholt factory in Harbo, And we installed those solar panels last summer. So The LED technology also brings new possibilities for smart connected lighting control solutions. We call it connectivity solutions. And there are multiple benefits with good connectivity solutions. It brings significant energy savings, up to 70% with presence detection and motion control. And for outdoor environment, remote monitoring can also help lower the maintenance costs. So besides energy savings, connectivity solutions brings new features for increased well-being by adopting light space and preferences or adjusting for daylight levels. In outdoor environment, a top early lit area also helps increase safety for people by adopting light levels. And beyond lighting, there is new business opportunities together with partners in the building ecosystem. And this includes using our Luminar sensors and sensor data for new user cases and integrating with other systems. And So far, if you look in the market, the adaptation is rather low. We estimate that only 10% of applicable projects to be delivered with full connectivity solutions, as you can see and described above. So this is a good opportunity for the coming years. And we also already See a very good increase for organic response solutions, where we sold approximately 80% more units from last year compared to the year before. So we go back to Sineco. And within the group, We have 2 in house connectivity solutions, 1 for indoor, organic response and 1 for outdoor, which is Seneco. And those systems have the same basic principles. They are based on presence protection, which brings Significant energy savings because light is only on when you need it. And both systems work stand alone. But by connecting them, the user gets access to additional features and functionality. So both systems are also based on open architecture to make it easy for integrations and partnerships with other building and city management systems. We continued our investments in the connectivity area in 2020. We opened a new competence center for organic response in Linkoping, a complement to the headquarter, which is based in Melbourne. And beginning of April, we also acquired the remaining 80% shares in Soneco, where we have collaborated for the last 5 to 6 years. And the Seneca solution is already in use or in development by all the brands in the groups that are selling outdoor lighting. So that ends the part of my presentation, which was more market oriented. And I will hand over to Michael for more financial numbers. And I would do that with this stunning picture, which is from London. And it's the Royal Wharf Pier and its lighting from La Jindia. Please, Michael, if you can give us some more numbers. Okay. Thank you, Boeder, and thank you, Michael, and good afternoon, Welcome to our 2nd webcast. Hope you enjoy the rest of the show. First of all, Looking at the Q1, the results for the Q1 clearly demonstrate that the group continues to make a steady good progress in overcoming the challenges from COVID-nineteen. Since SEK1678 1,000,000 quarter on quarter sales were marginally adverse to 2020. You see them 0.7 minuteus, but comparable sales growth with good positive 6.6%. Many geographies and many product segments delivered good growth. At SEK 97,000,000 the currency headwinds remained strong and the SEK 24,000,000 divestments related to the sales of Lighting Innovations and Comtech from late last year and earlier this year. The operating profit of SEK 153,000,000 field tech delivered a 9.1% operating margin and this results strongly from 1.8 percentage increase in industrial margin. As reported last quarter, we continue the reduction in fixed costs. So both of those GP increase and fixed cost control contributing to the 9.1% in good measure. Operating cash flow is positive, again, at €59,000,000 slightly worse than €88,000,000 I'll explain that a little bit later But operating cash flow has been positive now for each of the last 11 quarters. Okay. Looking at the longer term sales development. Last time, I covered the development of the 6 year net sales levels. And so for this quarter, we concentrate simply on the quarter where we see a leveling off of the negative impact due to COVID. We were all looking forward to this point in time, and that's what you see from the net sales level reported earlier on, a leveling buff, but also from a comparable sales level, We see almost 7 percentage points growth in net sales. Operating margin. Firstly, a reminder that for Q2 sorry, Q3 and Q4 last year, you can see the light gray bars in the right hand side of the screen. They were adjusted due to the cost of the exit from our business in South Africa. And turning to the Q1 at 9.1% there. We see 9.1% is at a good level compared to the market. And this, as we say, is driven by operational efficiencies and Cost Savings. Taking each of the 4 business areas now 1 by 1. Business Area Collection delivered a much improved Q1 compared to last year with all entities contributing positively to the turnaround. And the turnaround operating margin closed 7.8% for the quarter. The results in our Italian entity was good in that first quarter. We continue to see the negative effects of COVID, however, particularly for those entities with a global reach and a global operation. But as Odo said earlier on, these effects are reducing. The order intake trend overall is positive and the gap on the comparable order intake and statistics. The trend remains positive. Focus and collaboration examples where we see good level of current and future opportunity, are working more closely with international specifiers in our high end at Brands here in Business Area Collection. And our Swedish entity in the south of Sweden, Atelier Lichtam, working well with the IGAZINE distribution network, firstly, in Denmark and in Italy. So good activities we see taking place there. Looking at Business Area Premium. Business Area Premium, as we know, is concentrated in Europe. And where the countries are developing at different rates from the initial COVID impacts, in the UK, We see increased activity, whereas Vodal mentioned, the certainty of Brexit gives clarity and the vaccination rollout program makes good progress And contrast this position with what we see in the Nordic region where we see a slightly lower level of activity as the current wave of the Pandemic remains stubborn. The restructuring programs completed during the second half of twenty twenty resulted in a lower cost base. And despite the slightly lower sales level, the increased operating margin moves up to 11.4% from 7% a year ago. Here we see specific opportunities in the DAC region for our indoor brands, and the address in the Retail segment is of prime importance for us. Professional, the third of our 4 business areas. The entities in professional business area combined to deliver a strong start to the year. Each of the metrics is positively ahead. The 20% organic growth in order intake was strongest in the UK, Likewise, strongest in the U. K. For the 34% growth in net sales. White Cross experienced a good market response to their circular product platform Vitality, as Bozal mentioned earlier on, where the portfolio now continues to grow. Late last year, with the launch of the 1st Vitality cradle to cradle Certified luminaire and now there's 2 luminaires in that portfolio and working on a 3rd. And the response from the market has been very good. A good level of operating consistency is anticipated as Australia and the UK make good progress in dealing with the pandemic. Business Area Infrastructure. In Infrastructure, the numbers for the Q1 do not look so good, but I'll explain a little bit as to why. First of all, the Q1 of last year was very active, very high level of activity, particularly in our Dutch based business, where they were embracing several large projects in the e commerce segment. I think we reported on that in our Q1 report last year. The e commerce segment continues to grow and one now where we see increased level of competition due to its attractiveness. In the business area, we see the U. K. Entity performing well, a factor that is consistent for the group's businesses in Britain and a steady growth also coming through in our Finnish business, EBITDA. Coming back to cash flow, the group has got Very strong cash generating capabilities and abilities. The decentralized model works well here. And here we see that for the last 11 quarters, we see a positive cash flow across each of those quarters. The resulting rolling 12 month cash flow, which is the line that you see, has been now above SEK 1,000,000,000 for each of the last 18 months, so at a good level of cash generation. We continue our focus, of course, in this area, and it's a focus that is well managed. Net debt development, Again, a reminder, what you're looking at here So it's different than what we report in the report. First of all, it's a reminder that the net debt is stated here without the impact of IFRS 16. And the chart for net debt to EBITDA ratio is also adjusted for IFRS and Acquisition and Disposals. Again, the history on the chart was covered in some detail last time we met, So I'll report only on the closing quarter with a net debt to EBITDA ratio of 2.37, which is the lowest ratio we've had since the end of 2018. Liquidity in the group is at a good level and continues to grow. My last slide. And as a reminder, it seems as though I'm doing lots of reminding today, but it does need reminding. When you look at the Q4 EPS number there, Q4 from last year. The Q4 EPS from last year benefited, if we recall, from the new Italian tax decree that the group took advantage of in Q4 last year. So I'll refer you to Q4 report Also details of that and also refer you to the Q4 report to recalculate that EPS measure based without the impact of the Italian tax decree. Turning to the current quarter, quarter 1, 2021. We report a steady SEK0.53 per share, not yet at the level of our ambitions, of course. But for the Q1 in 2021, we suggest it's a good step in the right direction and a step forward from where we were during 2020. Okay. I'm going to close now with leaving you with an image of the Red Dot award winning new Super Rail and Robin Spotlight from Egadine. I hand back to Bodil for a few slides of recap and closing. Thank you, Michael. It's quite amazing what you can do with light. It's almost a piece of art. So it's not so strange that we have a lot of passion for light within the group. So, but back to conclusions and recap. So when we look into Q4 and what we said before is that We saw an organic sales growth in the quarter and an improved profit margin of 9.1%. And this is a result of both good margin development and the strict cost control with all the measures we took last year. And we are quite pleased to see these results. And in addition to that, we are continuing to work on our group strategic initiatives, including strengthening Outdoor Connectivity Solutions with the acquisition of Seneco. And we also see, as Michael said, increased collaboration activity within the different business areas where activity level is high. And I think that's a positive effect of the new structure that we launched last year and also quite promising for the future. So as presented last time, we have 4 key focus areas on a group level that we will continue to work with, and we will take steps forward in all of these areas, and I will continue to report on them. And on our call value, we have asked all our employees about feedback on the proposed direction. And with that feedback, we will now finalize that work and start implementation. And very high on the feedback, this is what I said before, it's passion for life, which might not be a surprise taking into consideration where we come from and our big knowledge in the lighting solutions. Within sustainability, the focus from the group's perspective is on the materiality analysis, which allows us with stakeholder interviews. And this will be an important background material for the sustainability strategy and target setting that we continue to work on. And on the connectivity side, I've already told you about the Sinek acquisition. So I will end this presentation by giving you an example of cooperation within the connectivity field to show you what we can do even beyond lighting. So our collaboration with Secrutus It's an example of the extended ecosystem. We have been working together with Securitas for a few years. And in April, we launched an extended partnership where we use our organic response sensors that are integrated in our lighting solutions. And then They communicate with the Securitas alarm system. So the systems can support the alarm equipment to localize, for example, if you have a building that you need in a critical situation and you need to detect people that are not supposed to be there as a part of a burglar alarm. In this way, we bring added value to the customers with a better overview for the property owners of their buildings in a very efficient way as we use the wide capillarity of lighting. So I think it's a solution which is beneficial for both the customers of the Curitas and the customers of Fagerhut. And this is also a very good example why it's so important to work with open systems that are easy to integrate with. And we are looking forward for more partnerships to come in these kind of areas. And with that, I will end the presentation, and I will Hand over to Michael and see if we can open up for questions. Alternatively, for those asking on the webcast, you can do so by clicking the questions tab on the top of your webcast page. We have a question from Matt Liss of Kepler Cheuvreux. Matt, the line is yours. Yes. Hi. Thank you and congrats on the good quarter. I have a couple of questions. First, Can you hear me? Sorry. Yes, we can. Yes, great. First, I guess the order intake improved higher sequentially quite a lot. And I was just wondering How business activity have been during the quarter? I mean, you started or I mean, the last quarter the Q4 last year, you had Consider the lower order in sales is sort of picking up here in the Q1. Have you seen really good activity in sort of in for out orders during the quarter. Could you say something about that? Thank you, Matt. I will direct this question to Bodil. Thank you, Micah. Yes, I think if you see in general, I think what we said is that we see the we're getting more and more used to work in the current situation. So I would say, yes, we've had an increased activity level in the Q1, and that's what you can see. That's reflected in the results. So the very simple answer to that is yes. Yes, yes, Yes. And I think we've also seen, when you look upon it, it's been it's a trend that we saw. I mean, it's All the way through last year, but I would say it's been taking one step up in the Q1. Yes. And Just to get a feel also, I mean, raw materials and components seem to have a reason in pricing in other Business Areas. And have you experienced the same thing? I mean, just to get a feel for how much is price and what is volume in this sequential improvement. Michael, maybe you can give a perspective on the price levels and the components shortage there. Sure. We touched a little bit on this last time, Matt. So you're right to follow the question With the second question this quarter around, I think everybody, as Bruno mentioned in her opening slide, I think everybody is aware of disruption in the supply chain. We see that disruption manifest itself in lead times that we are that you Can we are protecting against with increased inventories, one of the reasons for the less than last year cash flow in that Q1. And then the other disruption effect and impact that we see is costs and cost pressures coming through. And we see this on a few different items. Some of them can be a Significant percentage, but on a low percentage share of the mix of Aluminaire. At the moment, it's Not troubling us too much. We do want to ensure consistency of delivery. So we are taking measures to 1, we're working well with our supply chain 2, we're providing long term forecast The demand levels to our supply chain. 3, we are providing call off orders, not just now for May June, but for also now July August into September because that helps on the lead time protection and service to our customers level. And then 4, we are having some price discussions with our supply chain. But also, As it is a global situation, it's not one of our own making. We do seek and we are I'm currently turning to our customer base, and there will be some select areas for recovery of those pricing in the marketplace. It's a situation, I would say, that's manifested itself outside of our control. And it's the situation that's facing not only lighting, not only construction, but many, many different industries across the globe. So I think, Matt, we're resourcing it well. I think we're doing everything that we need to do. And how long will this last for? Well, some people put Q3 on it, some people put Q4 on it. Some of the more pessimistic people put Q1 on it. So your guess is probably as good as mine when it comes to how long that will last. Yes, since you're managing me all right. So I just wondered about semiconductors, is that an issue in this industry as well for you? I mean, it's in the Well, the demand of semiconductors from automotive has an impact on the fab plants where the semiconductors are produced. And those producers from the fab plants. They also have customers within the lighting industry that make the LED electronics. But we have good relationships with our largest suppliers of LED Electronics. We have good inventories. And for our 2 largest We are category AAA customer to them. So whilst at the moment we have taken measures to increase our inventories and work Closer together, I would see an odd, and I say odd, 1 or 2 across all of our 17 factories. The odd 1 or 2 instances so far of outages. It's largely being covered with the relationships that we have, the inventories that we hold and the high categorization of the Faehold group accounts from those 2 large supply chains. Okay, great. And then I was just wondering about sales in the Q1. I guess looking back, the Q1 had been sort of a seasonal slow part of the year. Should we see it way now also or have the structure changed through the acquisition of Egosin, so it's more of level out throughout the year. It's similar. Can you say something there? So maybe Bo will continue on your first answer to that. I can start. I think what we've said in the past, when you look upon it, where there is a seasonality effect is on the outdoor and indoor side of Things indoors all year round outdoors more in the summer season. And when you look into Usina, they have both. They both have outdoor products and indoors. So I would say there are no big changes compared to how it's been before on the seasonality side. It's been more when you look into the past Yeah, it's been more the COVID has been affecting that side of it. So I will assume we will see the same patterns. No major changes, I would say. I don't think you have anything to add, Michael, from your side. Yes. I just need a little bit of clarity So, Max, on the Iguazini comment there. I mean, Bodil's talked earlier on about organic Line for line order intake in Q1 of minus 7.4% comparing to 2020. We have to remember that 2020 was quite a strong 7.1% organic growth on order intake. So if you skip over 2020, the order intake at the organic level in 2021 was at the same level as it was in 2019, so far 0.3 percentage points. So We see that continued trend recovering quite well. It moved through the quarter. The exposure that we have, the traditional exposure that we had to our seasonality is less because of the geographical spread that we now have and also the product spread that we now have indooroutdoor, in Northern and Southern Hemisphere. I think that works quite well for us. And We look forward to moving forward through the rest of the year. Hopefully, these trends continue. We don't see the new waves of The pandemic, as Bo was mentioned, we don't see those as significantly damaging our performance because these people are on learning and coping and learning how to cope and learning how to deal with the new ways of working. And that's been part of the secret to our success in this Q1, learning from the challenges last year into new ways and delivering the 6.6% growth organic net sales. And then I also in addition to that, I think there is also always you can always make a difference yourself. So there is from that side also very high activity level within the Different entities in what they're doing now that we maybe weren't able to do a year ago. So there are a lot of Digital, I think as we mentioned it in the report, there is a lot of digital product demonstrations going on, for example, that we weren't able to do just a year ago. So that makes a difference, a new way of working together with our partners. Yes. But also, Bodo, we sorry, and also, Bodo, we are working and delivering upon many, many different things within the That's not only concentrating on today's quarterly results, which of course is important to get right, but we are We have a long list of activities that we are going through and ticking off that will do us good for next quarter, the quarter after the one after that and also for the future. So we're not we are busy at the moment delivering on many different Great. Yes, that's right. Okay. Thank you. I step back in line. Thank you, Matt. Thanks, Max, for your kind words when you open your questions. We have no further questions via the phone lines. Thank you, Mario. We will continue Just from the web audience and then we have a question regarding our margin outlook. So I will direct this one to you, Bodil. Are you happy with your margins? Or where are we going in terms of profitability if the growth continues? I think it's you never are happy with your margins, are you? You always want more. I think what we said before in the opening, I think that the 9.1% is a good operating margin where we are today. We also know that we have had higher levels in the past. So of course, we would like to get back to those levels that we have seen. And I think for our part, it is very much connected to the sales volume, because we are good on the GP margin side. We have been working very actively on the cost side. So The whole part is to make sure we continue the order intake and the growth on the organic side, which is important to us. I don't know if you want to add anything to that, Michael? Yes. I mean, we are happy with the 9.1%. It's a historical backwards looking margin. But to have recovered from where we were a year ago. And also, I reported at the last webcast An average of just over 8% for Q2, Q3 and Q4 last year on the adjusted basis to come to Q1 2021 With a 9.1% clean unadjusted margin, yes, I think we are quite happy with that. Does it mean that we'll be happy with that going forward, like my earnings per share comment? No. We have ambitions for hire. We do want to return to where we were at strongly double digit margins. But we've made a good start to the year, and we continue to work hard in all of those areas. And Bodo is right. The volume going through our factories is a key indicator of Margin Delivery. And as the volumes return, that should benefit the future levels. Good. Thank you, Michael. I think we have covered the other questions that came in from the web audience In the earlier discussions and response, math questions there. So I think we should consider ourselves to be done with the And maybe after Corbjorn, if you both want to add some last reflections from your side. We have received a follow-up question from Mats of Kepler Cheuvreux. Yes. So, Pat, the line is yours. Yes. Thank you. I have to let you go. Just wondering about the costs have been on hold during last year in traveling and marketing and so on. And do you expect them to sort of reappear gradually now? Or have you sort of implemented cost savings that You don't need to see that. Could you say something about that? So maybe Michael If you could Absolutely. Although it would be good to end on not a cost question, Michael, but I'll gladly take the question. What we did last year, Max, we did we worked hard at our cost base. Obviously, there were some natural cost reductions through COVID and traveling. And then we worked hard in many, many other areas. What we have successfully done is that we focused our cost areas on the strategic forward looking areas. And that's been important for us to do. We haven't taken The same approach with each type of cost spend. That's been a key tone to our discussions. So we've prioritized current and future activities. Of course, we have. When you then talk about Some of the traveling returning, yes, people are going to get back to traveling at some point. So some of that will come back to the organization. But a reminder is that for the Q1, the SEK 107,000,000 Reduction in selling and administration costs compared to Q1 last year, a similar number in Q4 last Yes. Lesser numbers in Q2 and Q3 last year. So all in all, close to SEK 450,000,000 SEK 450,000,000 cost reduction. So in fairness and being honest, To generate the future, we can afford to do a little bit more selling going forward. Although, Given the digital media, it probably won't be anywhere like at the level that it used to be in the past. Great. Then our guest side was a bit curious about the competition in the sort of while you have this targeted or the cooperation with security task. And what is your competitive Position there. Are you ahead of competitors or do you meet the similar ones, Signify and so on going out there? Your question you meant on the more on the connected side, if we see similar types of competitors as we do on the lighting side? Yes. I think I was Yes. So both of them targeted, I think, from Matt with regard to the Securitas relationship and agreement that we have. Yes. But I answered your question as more general now than related to the securitas Relationship. Yes. Yes, probably. You're right there. Yes. Yes. I think that if you what I said before, I would say it's still very early days. As I said, it's 10% of the projects today might be connected. So I think it will be quite a lot of changing landscape. I also when you look into it, where I think it's interesting for us, So I would say that it's competition. I would rather say that probably the biggest competition is the ignorance, Meaning, still lack of knowledge in the market about how do you do this, Then it's really competition, which is the big question. So maybe if you ask me that question in a few years, I will have a different word on it. So What we're doing is that we are taking very much steps in a direction. And I think what we one of the very strong elements of our side is that we're going for open And I think that's a choice to do that because that makes you can that you can work more with ecosystems. And I don't see everybody taking that same approach. I see some people working more in closed environments. So I think we're making some early choices that will So it's benefit us going along, but we are still in very, very early days. And also, if you look upon it, I think questions we need to ask ourselves is, how many we look into cities, how many cities do we think will be smart in 10 years? And also when you look the same, you can ask yourself the same question about buildings, how many smart buildings which will happen in 10 years. And there, I think there's been a lot of things happening the last year because we look upon the office, we look upon the building in a completely different way now that we did a year ago. I think that, that is more to me it's more important that side of it than the competitive side of it actually. Yes. And what about the revenue split between your Securitas? It is sort of how you install their equipment and they have some sort of service PES they usually have or how do you Yes. As I mean, we have our own go to market part because we install our sensors that then can integrate into the system, thanks Organic response. And they then securities will work with their normal way of working from a service perspective, yes. So we use our normal go to market rates. Great. And just finally about the financial, I mean, as you And you are at this level of net debt since the Q4 before the ecosene acquisition. And I guess it seems that you are prepared to make a move. I guess you've made an acquisition here of Sinesco, but it seems you are in good position to make further moves as well. Do you have any list there about further acquisitions or should we see Agusine is, well, it's also a step change and you don't need to take more We all recover this. No. And I think what you need to see there as well is that there is a little bit of a with the new four business areas, I think we're looking more targeted from the needs of the different business areas. So there you might See a difference in the future, but we always have our eyes open, but it also needs to be interesting enough. Yes. Thank you. Okay. Thanks a lot. Thank you, Matt. We have no further questions on the phone line, so I'll hand back. Yes, and no further questions from the webcast that we have not covered. So Again, Bodil, any last reflections from your side? Or should we go to closing? Two words maybe, I think summarizing what we've said and also summarizing your questions in that sense. Think we look upon the future. We're cautiously optimistic. I think there's been a lot of movement in the last quarter, which is all positive. And I also one of the things we highlighted last time was that we were very happy that when We saw COVID happening last year. We've not we just introduced a new strategy. And one of the decisions that we took, which Michael highlighted before, that was We were saying we're not going to stop these initiatives. We're going to move forward. And we have done that all last year, and also we are continuing. And I think we're starting to see the results of that in small steps, and they will continue to be small steps moving in the right direction. So I think I'm happy with that. I'm cautiously happy with the results, and I'm also happy with all the steps we're taking in the right direction. So that might be an ending comment. So thank you everyone for joining today's conference call and presentation. And of course, we hope to see you again at our Q2 presentation, which will be after summer and on August 23. So again, thank you for listening today. Thank you from Michael as well.