Earnings Call: Q1 2020

Apr 29, 2020

Ladies and gentlemen, thank you for holding, and welcome to the Exactone Q1 Report 2020. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. I must advise you that this conference is being recorded today. And I would now like to hand the conference over to your host, Ola Rolland, Chief Executive Officer. Please go ahead, sir. Thank you, and good morning, good afternoon and good evening, everyone, and welcome to the Q1 report for 2020. And I suggest that we go straight to Slide number 4, Overview of the Q1 in 2020, it's indeed extraordinary times that we are living through. And recorded sales decreased by 3%, but organic sales dropped by 7%. We saw solid organic growth from our software oriented division, PPNM and Safety and Infrastructure that grew 8% 24% organic growth, respectively, in the quarter. Geosystems and Manufacturing Intelligence recorded minus 11% and minus 14% organic growth. They were negatively impacted by a slowdown in demand related to the corona pandemic that we are all very much aware of now creating havoc around the global economy. It's an extraordinary situation really where within the quarter, China reduced its sales by 40% and Western Europe by the end of the quarter saw negative growth. But excluding China and Western Europe, the rest of the world for Hexagon grew by 4% organic growth. Earnings and margins. Our EBIT1 margin was 21.6% versus 24.1% last year, and they were negatively impacted by the sales decline and currency effects. Gross margin, on the other hand, came in at 64.2%, driven by favorable product mix and initiated measures. We're also introducing a program to accelerate our operational efficiencies within the group and to support our long term financial targets. Moving to Slide 5, just a reminder that typically, Q1 is the weakest quarter. This is a very special year, so we'll see how it pans out. But that's just a reminder of the seasonality for Hexagon. Moving to Slide 6, an overview of the P and L statement. Net sales amounted to €889,900,000 and our EBIT1 amounted to €192,400,000 corresponding to an EBIT margin of 21.6%. Cash flow, Slide 7. We had a very strong cash flow. And as you can see, we generated good operational cash flow, but also a release in working capital. So cash flow before nonrecurring items amounted to €146,000,000 versus €106,000,000 for the corresponding period of last year. The cash conversion in the quarter was 107%, which is to be expected when the business decreases its sales. Working capital to sales, Slide 8, continued to improve and we're now down to 11% working capital to sales for the group. Slide 9, talking about the cost savings program. If we do a bridge for the EBIT margin Q1 of last year to Q1 of this year, we can see that we had an adverse impact of FX stemming from the Swiss franc primarily of almost 1% quarter on quarter. The product mix improved the EBIT margin by 1.6%. And as you can see in the P and L statement, our gross profit only was only reduced by €1,700,000 in spite of a significant revenue drop of €27,000,000 Volume had obviously a negative impact in the quarter and OpEx is the biggest contributor to the negative development of the EBIT margin. Now we have, throughout March, implemented short term measures that has included short work weeks, furloughs and reductions in discretionary spending. And we've implemented that in April. And right now, roughly 60% of Hexagon's workforce is involved in 1 or more of these activities. But looking at the longer term, it's fair to say that this is going to have a lasting impact on the global economy. So we have decided to launch a company wide cost savings program that addresses structural changes from reallocating resources from businesses that we believe is not going to benefit in the future to new business opportunities, also optimizing office locations, merging facilities and so forth. We're also going to include workforce reductions that reflect more enduring changes in the market demand and the revenue mix. Therefore, we've decided to take roughly SEK135 1,000,000 in the Q2 of this year, with the majority impacting cash flow. The annualized cost savings, which are also cash flow positive, also cash flow positive or approximately €125,000,000 to €150,000,000 and we expect to reach that level by the end of this year. Now market development, if we move to Slide 11, it's been a dramatic quarter since China literally shut down our operations in late January, early February. We have a campus in Wuhan that was the first one to be shut down. And then sequentially, Shanghai, Beijing, all major locations, including our head office in Qingdao was shut down. So even though we could still call our customers, we couldn't really ship invoice or service them. And that had a great impact that we've seen in the numbers. China as a share of total sales dropped from 15% in Q1 of 2019 to 9%. The polar opposite would be North America, where we had good growth and good business up till the very end of the quarter. And North America in the quarter now represent 34% of Hexagon sales. Now looking at contributors to growth, Slide 12. China is the single biggest negative impact in the quarter. The 7% organic decline, 6% stems from China, the rest from Western Europe. And if you exclude Western Europe and China, the rest of the world grew at 4% in the quarter. Slide 13 is more details per segment and geographic region, and I leave that for you to study at your own convenience. And I move on to Slide 14, EMEA. Western Europe didn't see much slowdown early in the quarter. We really saw the major slowdown in March. And one must remember that we do almost half of the invoicing in the quarter in the 3rd month. So with the shutdown decisions that we saw in France, Italy, Spain, Germany and then late in the quarter also in the U. K. Had a great impact to the major markets in Western Europe. We did, however, see strong growth in Middle East, and we also saw continuous growth in Eastern Europe and Russia. Slide 15, Americas. Americas reports 6% organic growth in the quarter, and North America recorded single mid single digit organic growth, solid growth within Power and Energy, Manufacturing and Public Safety, slightly hampered by somewhat of a decline in surveying and construction solutions. South America, double digit growth, and it was backed by continuous recovery in Brazil and also solid demand in mining solutions from the Andean countries. Asia, Slide 16. China recorded, as previously stated, minus 40% organic growth, And it was affected by the COVID-nineteen shutdown throughout the quarter. And really only at the very, very end of March could we see an improvement as authorities allowed us to gradually go back to work in our facilities in China. And this recovery has continued. And towards the end of the quarter, we actually ended with a positive book to bill ratio in China. South Korea and Japan had a swift recovery in the quarter, and they recorded solid organic growth in the first quarter. They came out of the pandemic restrictions fairly swiftly. Southeastern Asia and India declined in the quarter. Reporting segments, if we move to Slide 18, Industrial Enterprise Solutions. Mi was heavily affected by the decline and the shutdown in China. North America, however, reported solid growth. And late in the quarter, we also saw a decline in the major European markets for primarily automotive for Mi. PP and M reports 8% organic growth, and that was supported by all areas, but very strong development in the design and asset management portfolios. But also, our AEC business saw very strong growth in the quarter. Sales amounted to €436,000,000 and EBIT, €93,000,000. Ge €1,000,000 Geospatial Enterprise Solutions, Slide 19, organic growth of minus 4%. Geosystems was the most heavily hit segment within Geospatial Enterprise Solutions. And government restrictions related to the COVID-nineteen pandemic prevented us from selling into primarily the Western European construction markets. Mining continued to see favorable organic growth in the quarter. SI has turned the corner and recorded 24% organic growth on the back of the success we're seeing with our recently launched OnCall platform, which can be implemented even in a situation like this since it's a cloud based software. Autonomy and positioning, minus 1%, positively impacted by solid demand in defense and agriculture, but adversely impacted by weaker demand in automotive and marine. The segment reports €454,000,000 of sales €102,000,000 in EBIT. Slide 20. The gross margin was at record levels in the 1st quarter, 64 percent. And on 12 months trailing, it's now at 63%. Slide 21, EBIT margin is now at 24% for 12 months rolling and weaker at 21.6 percent for the quarter. Moving on to orders and product releases quarter and acquisitions, Slide 23. Hexagon acquired CAE Fatigue. It's a software company doing mechanical fatigue simulation solutions, and it's going to improve and further strengthen our simulation portfolio within discrete manufacturing. Slide 24, GeoPrevent is an acquisition in the geospatial that strengthens our suite for natural hazard monitoring and alarm solutions. GeoPrevent has a system that warns for dangerous events such as landslides, rockfalls, avalanches, earthquakes and so forth. And to date, it has 100 light systems across the globe and is based in Switzerland. Slide 25. We also acquired a company called Blast Movement Technologies. It's a pioneer in blast movement monitoring for open pit mines. And the acquisition will be integrated into our drill and blast solutions suite within our mining business. It's got more than 100 customer sites, covering 9 commodities in nearly 40 countries. Slide 26. In connection to CES 2020 in January, we launched our suite of smart autonomous mobility products. We have 3 solutions. We have Enable, Accelerate and Deploy. And it's for various stages of development for autonomous driving. Slide 27, we also launched Hexagon Doctor Digital Reality Platform that enables seamless combination of reality capture data. Hexagon has manufactured airborne, ground based and mobile sensors for 3 d reality capture over a very long period of time. But now we can combine these so called point clouds in one presentation, and that is what Hexagon Doctor is doing for us. It is the probably most sophisticated and accurate visualization of the real world that one can find today. And gradually, Hexagon's content program is going to be combined with this visualization platform, giving you access to all major cities in Europe and North America. Slide 28, the 1st surface, subsurface and geostation monitoring solution in a single package. We partnered with a company called World Sensing for a mine safety monitoring system that can offer surface monitoring of the slope in mines, subsurface monitoring and geospatial monitoring to warn for landslides early on. Slide 29, we were awarded best of innovation at CES 2020 for our Leica BLK2Go and our Leica BLK 20 fourseven that were the best innovation award at the show. Slide 30, LG U Plus is preparing for autonomous vehicle applications. LG U plus is a South Korean cellular carrier that is looking at rolling out our Spydanet network to provide GNS' correction services throughout South Korea. That will give them an accuracy, a positioning accuracy of 15 centimeters, which is required for autonomous driving. And they will offer this service through their cellular network. Slide 31, we won together with a Danish company called Netcompany, the next generation computer aided dispatch services for rescue forces and safety agencies across Denmark. And Hexagon OnCall will be installed soon. Slide 32. We worked with Frankfurt Transit Security, a company called FAGF, and they are also introducing our computer aided dispatch solution to keep their 173,000,000 annual passengers safe and sound. And we're integrating more than 300 IP cameras with our software to have real time monitoring of what's going on at various subways and tramway stations. Slide 33, we also got good solutions for collision avoidance, and we got an order from a Chilean copper mining company that purchased our mine protect system. That makes sure that vehicles, these large vehicles in mines do not collide and can actually break a vehicle if they are about to collide. And it's based on Wi Fi to wireless LTE data transmission. Looking at Slide 34, another order in the mining area, and this time, it's our MineProtect operator alertness system, where we monitor operators' drivers and track their fatigue levels. And this has been installed in 36 haul trucks in this mine, the zinc mine in Australia, and it's going to span over 46 units once fully deployed. Slide 35, we also had a location intelligence systems order from France's Navy. It's about mission planning and restitution based on our Lusiad portfolio, and it's for the Enplancique de aircraft that the French Navy is using. Slide 36. We also got an order for our agricultural software solution called Agron. And Agron Harvesting is going to be deployed, monitor and controlling and connecting workflows of 76 machines working with harvesting the crop in Brazil. Slide 37. There is a new initiative to transform the Paris urban city area into a more sustainable city. It will require a lot of monitoring and measurements. And MiRSAF that is responsible for this monitoring project has selected Leica Geosystems sensor solution to support the Grand Paris project. Slide 38. We were also involved in an interesting project in India where a service that will set up a dedicated call center in Uttar Pradesh, India's most populous region, to enable women to register harassment complaints online. And we're going to geo reference these complaints so that you can see on a daily map in your mobile phone hotspot scenarios and no go zones. And that will help the police to better manage its resources and put them and deploy them where it makes most sense. Slide 39. Hexagon solutions are supporting the response to the COVID-nineteen pandemic. We have opened up our content program and our imagery library to both United States and Europe, to government agencies and nonprofit organizations to manage the COVID-nineteen outbreak and follow it as it spreads. And we also are working with an on demand drone company in Ghana that use our positioning technology to deliver COVID-nineteen samples from health centers in remote areas. And we've also done many simulations using our simulation software to demonstrate to health care organizations how far the virus can travel in air under certain condition depending on if you wear a mask or do not wear a mask. Finally, we come to the summary on the last slide, and we report minus 3% sales, 7% organic decline, solid growth for PPNM and S SI, but we saw weakness in Geosystems and Mi in the quarter. We've initiated measures in the second quarter to accelerate our efficiencies and to support our long term financial objectives. And with that, operator, I am ready to answer any questions there might be on the call. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer And your first question comes from the line of Stacy Pollard of JPMorgan. Please go ahead. Your line is open. Thank you. Two questions from me. Firstly, how are we thinking about revenue growth in Q2 and then throughout the year Q4? Secondly, longer term savings plan, can you provide more details on which divisions and areas you're taking resources away from and what you're putting them into? And third question, how are you thinking about your midterm targets or 2021? Are those 27% to 28% margins still possible given the savings spend? So in other words, does that does the savings spend make it possible or you're not sure? Sorry, you're breaking up a bit. Is it are you referring to the top line or the margin or both when it comes to targets? Well, I was asking about margins on the targets. Yes. Okay. I mean, it's early days in this crisis. And I think most of the people on the call are affected. And most of the people in Europe at least are in lockdown. So it's very hard to give a prediction what's going to happen in the second quarter and indeed the second half. But we have to believe in some kind of recovery in the second half of the year. I think specifically for the second quarter, we were early hit in China. And I think compared to many other companies, we might see a much better situation in China in the Q2, but we should also expect Europe and North America to at least be significantly hit in April. Regarding areas that we're watching closely are obviously the oil and gas segment and the aerospace segment where we do see that the COVID pandemic might have and the oil price slump might have a lasting impact on long term demand. But there are other areas where I believe we can reshuffle those resources like the AEC market where we think we might have a greater growth going forward. Targets, I think it's too early to speculate, but obviously, this program is aimed at preserving our EBIT margins going forward. Thanks. Thank you. And your next question comes from the line of Alexander Virgo of Bank of America. Please go ahead. Thanks very much. Good afternoon, Ola. I trust you're well. Thanks for taking the questions. One question on your margin cost savings plan. You used the phrase, more enduring changes in market demand and revenue mix. And I just wondered if you could expand on what you meant by that with respect to the cost savings, because I think it's quite an interesting use of terminology. And then the second question was, given the product launches, I appreciate the demand is not in a great place right now, but the product launches in particular around the CES awards, for example. Wondering if you could talk about how well the reception has been for those products in, I suppose, North America really and Europe, given those are the only areas where I'm guessing you had some element of demand in the quarter? Thank you. Yes. No, the response has been good. But unfortunately, we had to stop shipping late in the quarter. So it's really hard to say. We see our backlog, which is healthy, but it's very, very frustrating to endure this lockdown because we can physically not ship our products by the end of March as things pan out. Talking about enduring changes, I can only reiterate we're carefully looking into the future long term demand for Oil and Gas Solutions and Aerospace, the Aerospace segment where people believe that maybe the first thing that's going to happen is not that we pack an airliner full of people going to Marbella on vacation in a crowded beach. So, aerospace is probably going to see a weaker market going forward. And I think the large OEMs have confirmed that. Areas that will benefit from what we're seeing now is all areas where we can automate workflows and reduce interaction. And also, we believe that the AEC market infrastructural investments across the world, and that's going to benefit Hexcelon. And we need to adapt to those changes in demand. And your next question comes from the line of Adam Wood of Morgan Stanley. I've also got a few, please. Maybe just first of all on the whole issue of not being able to ship products, is it possible at all and maybe particularly in Asia for you to try to split out what was the impact on the revenues from the lack of ability to manufacture and the lack of ability to ship versus the actual decline in demand in the markets that you saw? And was that first aspect material or was it really just the actual demand that slipped the cause of the organic decline? I don't know that would be really helpful. Maybe coming back to the Q2, I wonder if you could talk a little bit more in detail around how China and Asia have started to improve. And then you alluded to the fact that Western Europe and the U. S. Would likely be impacted. Should we think more about the minus 40 in China or the minus 20 in Asia as a better guide for what might happen in those markets? And then given April is a smaller month than June, how much of that also pay into? Any thoughts you could give us on those would be very useful. Thank you. It's almost impossible to answer those questions. It's just speculation. But if we start with the outlook for Q1, at late as early March, we still thought that the group would grow organically in the Q1. So it just shows how steep and how swift and how quick this decline was. And secondly, if I answer China, China is, as of now growing compared to 2019. So we've seen a V shaped recovery in China. I don't want to speculate on what Q2 is going to look like in Europe and North America. It's beyond my comprehension, unfortunately. Okay. Thank you very much. Thank you. Thank you. And your next question comes from the line of Svein Murt of Barclays. Please go ahead. Good afternoon. Thank you for taking my question. I have 2. I know you're not giving explicit guidance, but looking back at 2,009, revenue declined organically by nearly 20%. Now today, you have a much higher mix towards software revenue. Would you say that the 20% is probably that still worst case? Or could it be worse? And then secondly, it looks like in PPM, you had a good start with smart build. To what extent was this one off, I. E, your beta partners putting big upfront orders in that you recognize upfront? And related to that, how are you seeing the competitive environment around AE software molding? I just noticed that some construction software vendors started to offer the software for free for the rest of the year. Thank you. Wow. Let's see. What was your first question again? Sorry, the first one? Yes. Yes. This was just around 2,009 when revenue declined by organically nearly 20%. Is that something that you see as absolute worst case or That is an absolute worst case. We've actually looked at the product lines that we had in 2009 and how they fared in the Q1, and we see a similar pattern. But for Hexagon, we see that everything we've added after 2,009 were much more resilient and actually grew recorded growth 12% in the quarter. So minus 20% for me sitting here right now, and I hope I won't regret it, would be the worst worst case scenario. I think we would see significant declines in other markets if that were to happen. Secondly, PPNM is definitely off to a good start. It's the AEC portfolio delivering, but it's not SmartBuild that is still in beta mode and we're still doing projects. We started invoicing a little with SmartBuild, but it's not SmartBuild growing. It's more our CAD design software offering through Brexit that has pushed NRE Cos' cost budgeting package. Okay. That's clear. Thank you. Thanks. Thank you. And your next question comes from the line of Wasi Ritsev of the Royal Bank of Canada. A couple for me then. I appreciate the lockdown rules vary by country. But if you exclude outliers like India, can you maybe help us understand which of your businesses have been able to operate something approaching normally, whether that's because of the home working or because it's some kind of essential business in which you are kind of completely shut down? And then on the second question, could you how should we think about drop through on sales declines for hardware versus software the extent that you can really differentiate? And I mean, I guess, the example, looking at IES in Q1, PPM held up better than I would have expected, but I don't think the margins really reflect it. Perhaps, can you help me understand what the how we should expect the margins in hardware versus software to behave during sales downturns? Regarding businesses that have operated close to normal, I would say that all our pure software businesses like FSI, PPNM, our geospatial solutions in software, they have operated very close to normal. And our U. S. Centric businesses have operated more normally than our more European Asian centric businesses. Mi, especially the hardware part and Geosystems, the hardware part are the 2 businesses that were most significantly hit in this downturn. And discussing drop through, it's almost academic because no one knows what the mix is going to be going forward. So I think you have to look at the drop through in the first quarter. And then as of late Q2, early Q3, we will start seeing a positive impact on OpEx from this savings program, and that's the only way you can model it. And your next question comes from the line of Erik Gorbanc of SEB. Please go ahead. Thank you. I had a poor line, so sorry all these questions have been asked. But on the saving programs in scope and around 10% of OpEx, Is that a reflection of sort of where you see demand coming down on the full year basis? Or what's that thinking? How are you planning for ending up with that specific number? Then the second question, I appreciate the comments on you expecting there to be growth in Q1, still early in early March, but could you isolate March or sort of the end of March organic growth trend entering the Q2 would be quite helpful? And then the 3rd question related to your slide there on Hexagon Doctor and the imagery program. Any plans to roll the inventory program out in Asia? Thanks. Yes. No, there are definitely plans to roll it out in Asia. The only restriction is China, where you as a foreign company is not allowed to collect and store data. So we couldn't do it in China. But OpEx, we've looked at the things we had on our list to do anyway where we are underperforming and where we could rationalize and streamline our organization. And that is what we're going to address with this restructuring program. So we have acquired many companies over the years. It's time to look at back office functions, the way we sell products, for example, how can we use modern technology to do a product demo over the Internet rather than physically meet with customers. And it's these things we're looking into where we expect savings. And growth, at the end of the quarter, we had double digit decline for the group. This shifts on a daily basis though, so it doesn't tell you anything about Q2. In Q2, Asia will be much better than what we saw in Q1 and probably we're going to see a negative impact from North America. And a follow-up there. If you look on sort of the areas you highlighted, it's very uncertain, perhaps more in the long term oil and gas and aerospace. On oil and the process side of PP and M, what's your sort of lead time on the backlog there? How long would that business hold up before we start to see a decline? And I guess the same question on Aerospace. Yes. First of all, 70% of our business in Oil and Gas is recurring revenue. So that won't impact. It's more the perpetual business in the next few quarters. And it's really hard to say, but we typically have a lead time of 6 to 9 months before we see a downturn. Okay. And Aerospace? Aerospace is quicker. And there, we've already seen a downturn in Q1. Great. Thank you. Thanks. Thank you. And your next question comes from the line of Mohammed Moawala of Goldman Sachs. Please go ahead. Good morning. Thank you very much. Ola, I was wondering if you could just comment on your thoughts on kind of oil and gas. Given this tends to be a kind of more later cycle impact, do you expect this kind of downturn to sort of follow previous downturns? And secondly, when you think about the kind of operating margin profile of the group, can you remind us about the mix of software, hardware and services across the group so we can quantify it? Thank you. I didn't hear your can you repeat the question that was in line? Yes, sorry. So I meant the first question was on oil and gas. How do you expect the duration of that to play out versus previous kind of crises? There tends to be a kind of later cycle impact there. And then secondly, in terms of the mix of software, hardware and services in the group, just to understand kind of the recurring nature of the profile and how we think about sort of modeling kind of operating leverage given the various moving parts? Thank you. Yes. First of all, what's happened in the oil market, as you are very much aware of, is that since all planes literally are standing on the ground and people are not commuting to work, there is less need for oil and you can't store it. Longer term, we haven't really seen dramatic shift where oil is going to be consumed at a significantly lower level going into a more normalized global situation. Yes, we might fly less, but we're probably going to continue to drive our cars once this lockdown is over and so on. And that's going to benefit the oil price. So I'm no expert in oil, but we expect to see a better or a higher price later in the year. And we don't know what the impact is going to be on these large exploration and new projects that the oil industry is planning for when it comes to us for the longer term. So we're just a bit cautious on the outlook on oil and gas. If we take the mix for the group, what we're seeing right now is what anyone should expect that the subscription based business, whether it's hardware services or software services, is more resilient in a downturn. And that is reflective of the gross margin increase that we saw in the Q1. I also need to make a correction. Sales to ARO actually grew in the Q1, but orders were down. Are you happy, Mohammad? Mohammed, your line is still open. I think you take a question. I think you must have to move on to the next question. It comes from Magnus Kruber of UBS. Please go ahead. Magnus here with UBS. Just reverting to the savings program, there's a really fast implementation schedule there given the size and scope of the project. Could you expand a little bit on that? How is it just that you can act so fast on it and get the savings through so quickly? I don't know what to comment. I don't see it very fast. Okay. Now it's a relatively sizable portion of your top line that you get through on savings with this. So normally it would take a little bit longer to get through all savings, but I think you think this is relatively fast implementation. But I think we've all known that the party would own at one stage. No one saw coronavirus appearing, but you always need to have plans. And I think our management are quite used to doing plans for all sorts of scenarios. So I think it's thanks to our very strong management and our organization and our employees. Okay. So well prepared with these new savings targets already before then or savings measures should I say? Yes. Yes. Okay, brilliant. Then secondly, I mean, we have recently, I think as of yesterday, seen some new headlines coming out of the U. S, some potential changes in export restriction from the U. S. Into China specifically. Have you had time to sort of look at that? And have you any thoughts or comments about direct or indirect impacts from that? We expect hostility between trading blocks and countries to continue once this pandemic is over. And to some extent, we're witnessing the dismantling of globalization. And I think any global company needs to plan for that. So we've had that on our radar screen for the past year or so and are planning accordingly. Got it. Is this also part of the cost program? Do you do any adjustments? No, that's not cost related. More IP and how you plan for your immaterial rights. Got it. Thank you so much for that. Thanks. Thank you. And your next question comes from the line of Alex Staut of Deutsche Bank. Please go ahead. Yes. Hi. Thanks for taking the question. A couple of well, firstly, a high level one and then a couple of detailed ones. Firstly, the high level one, is there any revenue reduction that you foresee associated with the restructuring program, for example, closing down less profitable business lines, etcetera? No. There is no revenue reduction planned as such, but we might dispose of a couple of product lines, but it's minor. It's less than €60,000,000 annualized. Okay, great. Thanks. And then the more detailed ones. Firstly, the OnCall deal in Denmark. Is that deployment actually proceeding right now remotely? And how does that deal compare to a typical safety and infrastructure deal in terms of size? And do you see that there's a lot of incremental opportunity in Europe with Encore, because I believe SNI was historically mostly a U. S. Solution? Yes. No, you're right. And we can actually proceed because, as I said, it's a cloud based software solution. So we can do the installations we need to do on our side. And the only part that we can't do as long as people are in lockdown is the human interaction, the training, the physical handover, if you so wish. So right now, we don't see disruption when we do this business model. And there I think there are a lot of opportunities for on call not only as a dispatch system for rescue forces like fire, ambulance and police, but also electric utilities, mobile phone companies wanting to fix their outages in a rapid and smart way. So we believe that OnCall is really good product for us. How did that deal compare size wise relative to the norm? It's fairly similar size, high single 1,000,000 euros value. Typical deal would be for a large scale implementation would be between SEK 2,000,000 and up to maybe SEK 50,000,000. Right. Thanks. And then just a final one. You mentioned on the AEC market that you're optimistic overall. But I guess there could be a negative hit to private sector demand that could offset any potential stimulus, public sector stimulus benefit. I mean, are you just optimistic because most of your geosystems exposure is essentially driven by infrastructure and public sector demand? Yes. Correct. First of all, you need to put it into heaps, if you so wish. First of all, we have surveying. And the good thing about survey is they're busy regardless what kind of construction you're planning to do. And then within construction, you have the infrastructure projects that we believe will benefit. You have commercial and residential construction. And when it comes to commercial and residential construction, maybe the outlook is not as good as for Infrastructure. So we believe 2 out of 4 segments will do fairly well under the circumstances. So when you look at your GES exposure overall, would you say that's like you give us an idea in percentage terms of what is infrastructure exposed as opposed to commercial and resi? I think that the lion's share of what we call infrastructure and construction, 14% of last year's sale is more infrastructure than actual construction. And then you've got surveying, which is 20% of sales. So all in all, this segment currently is 34%, 35% of group sales. Great. Thanks. Thank you. There are no further questions at this time, sir. Thank you. And thank you for calling in, asking questions and listening. And we'll talk again next quarter. Thank you, everyone. Thank you. Ladies and gentlemen, that does conclude your conference for today. Thank you for