Earnings Call: Q2 2020

Jul 24, 2020

Hello, and welcome to the Loomis Q2 2020 Report. Throughout the call, all participants will be in listen only mode and afterwards there will be a question and answer session. And just to remind you, this conference call is being recorded. Today, I am pleased to present the CEO, Patrick Anderson. Please go ahead with your meeting. Thank you very much. Good morning, everyone, and welcome to the 2nd quarter presentation from Loomis. As you heard, I am Patrick Anderson, CEO. And with me here today, I have Christian Achebe, our CFO and also Anders Hacher, Chief Relations Officer. I will give a short overview of the quarter and then at the end, open up for questions. So let's start the presentation and turn to the next page, which is about the corona pandemic. As everybody can understand, it's been a quite a challenging quarter from many aspects, but we have put the well-being of our employees on the top of our agenda and quite spent a lot of attention and money and investments to safe guard the health and safety of our employees. I also would like to say that all of Loomis employees have done a fantastic job in maintaining the high quality of our services despite the tough situation we have had. So I'd like to thank all Loomis employees at this moment as well. I'd also like to highlight that there has been a lot of false rumors around cash, that cash is spreading the virus. And these rumors have been denied by many experts, also by the European Central Bank, WBAHO and many others, also the Swedish National Bank, they have confirmed that there is no heightened risk of using cash. And you can read more about that, all of that at our website. We also have a very crucial role in the infrastructure of the society. We notice that every day that banks and central banks, they are really keen that we are operating our services. I also would like to come back to that, that there are also as we have had the service on a high level, there are many opportunities going forward for us, but I'll come back to that a bit later when I talk about the segments. All our branches have been running, but not everyone at full capacity. We've been very focused on servicing our customer throughout the pandemic. Of course, we have cut all the costs we could and also postponed capital expenditure that you can see also from our P and L. I think that one strength we have had is the Lumis model, a very decentralized system that people on the ground take action every day to safeguard the service, but also reducing cost and manage the cost. We have as a consequence of the pandemic, we have postponed the dividend of SEK 0.11 per share, but we have also signed a new credit facility of SEK 1,200,000,000 to strengthen the balance sheet. Having said that, we are in a very good position from a financial point of view. We have a positive free cash flow in the quarter of $350,000,000 despite the situation. So I would say that we are very strong from an operational and financial point of view, and we are well prepared for the rest of the year. I also would like to mention that we see very high cash levels in all countries, both in the U. S. And Europe. And there's never ever been so much cash in the societies we operate in since the 2008 financial crisis that goes for both Europe and U. S. Having said that, let's turn to the next page and go through the highlights. And I'll come back to some of these highlights during my presentation later. But some bullet points. I talked about the dividend, but we also got approval from the authorities for the Nokas acquisition in Sweden, and the integration is ongoing as we speak. The real growth was minus 18%, and we had last year the acquisition of the Prosegur business in France that affected last year, of course. We have an organic growth of 20%, and we see, of course, significant negative effects from the pandemic. We see a larger negative impact in Europe compared to the U. S. And that has to do with the structure of the customer and structure of the contracts. We have more retailers or retailers, smaller retailers in Europe and in U. S, we have bigger financial institution and larger retailers. And that makes a difference. The quality of the service continued to be very high level. And as I said, we see future opportunities. Operating margin was 4.8%. Again, of course, impacted by the volume losses we have had. But the trend is positive. I mean, looking at the U. S, of course, we are in a very good spot there. But Europe has been recovering throughout the quarter, and we see positive operating profits in June. April was the worst month, of course, and then it's gradually been improving throughout the quarter. And as I said, a very strong quarter from a U. S. Perspective. And last but not least, operating cash flow, 2 64 percent of EBITDA. And here, we can see a high cash conversion affected by lower capital expenditure and positive working capital movement. That's been one of our focus areas throughout the quarter. Let's turn to the next page and go into Europe. I mentioned the acquisition in France last year. Of course, this integration has paused a bit during the quarter, but now we're up running again. And that integration process has now been intensified. France is and will be a 2 player market going forward, and we see that we can realize the synergies and create a very stable market in France. And as I mentioned, the integration of Nokas is also initiated and we expect positive results in next year. Organic growth was minus 29%. However, clear signs of recovery during the quarter. More countries are opening up as we speak. We see, of course, significant impact in Spain and France and UK. But when it comes to Spain and France, we actually see quite a bit of an improvement during June. And I would also like to mention that this crisis also opened up a lot of opportunities for us, both in Europe and U. S. But in Europe, especially when it comes to ATM fleets that are being outsourced, that we gain customer, we gain market share, There will be more opportunities for M and A going forward when some of our competitors are struggling in the market. Operating margin, 3.4% minus, of course, then impacted below volumes and then gradually an improvement during the quarter. So let's turn to next page, which is U. S. Organic growth was at minus 9%, and we had a good I would say good, a very good quarter when it comes to Save Point. Now it counts continued reason accounted for 18% of the total U. S. Revenue, which is also one of the factors behind the strong margin. I would say that from an installation point of view, it was also a strong quarter. We have a strong pipeline when it comes to Save Point. We actually now just recently closed the contract on 350 safe points with 1 of the leading fast food chains in U. S. And that's very promising going forward. So a very strong pipeline when it comes to SafePoint. Of course, some of our customers have we have offered them to postpone some of the payments, but that will be picked up later during the year. So that's more of a timing effect. CMS, 33% of the total revenue and of course then impacted by the pandemic and that gives a shift in the business mix. I will also say that we have had very high focus on the quality of the service that we are open that we service our customers. And we can also see an inflow of new customers coming to us. We also see that this event, the pandemic, is a trigger point for more outsourcing from the banks. Now it's a good opportunity to look at your and then outsource what's not core business. So we see that in and that is really happening as we speak. So in that sense, it's quite positive for us. Operating margin was at 15.1% versus 13.7% loss as the same quarter last year. That's a fantastic margin. That's all time high in Q2. Of course, there are a couple of factors that's influencing that margin. One is that we have been able to reduce the overtime cost at this situation with employment in the U. S. Is a challenge. We have been able to reduce over time and save quite a lot of costs on that side. We have a good expansion in the SafePoint business, but also we have a structure in the U. S. With more customers coming from the financial side, but also bigger retailers, which is in a way protecting the top line. We are focusing on our customers with that are willing to pay for service, of course, as we always have done. And we have been able, I would say, in a very successful way to drive efficiency in all our branches in the U. S. So from that perspective, a fantastic result in the U. S. Let's turn to the next page. And I'm not intending to go through the PLL. You have heard my highlights during the call here. So I would just say that I'll turn to we turn to next page and I will open up operator, we will now open up for questions. And our first question comes from the line of Daniel Thorson of ABG Sundal Collier. Please go ahead. Yes, thanks. I start with a question on Europe, please. When you say that June was profitable, is that including the €80,000,000 governmental support you got in the quarter? And how do you split that out through the quarter, please? Yes. So that's a good question. I think that just to be clear on that, we so the cost we have direct cost we had to handle the pandemic. So in terms of furloughing or cleaning or protection and things like that, it's double the cost as compared to what we got from the States. So net, we have more costs to handle the situation than we got money from the states from the government, to be specific. I see. So that is actually just compensating a bit of your elevated costs. That's how we should see it. Yes. It's not driving us. No. No. On the contrary, it's we have negative impact on direct cost of the pandemic, yes. Okay. And despite that, you did the profitable segment Europe in June? Yes, that's right. Okay. Excellent, excellent. And then we'll see in terms of organic declines per branches in Europe, where did you see the largest declines? And what magnitude are we talking about in a single branch? Are we talking about 50%, 60%, 70% decline in a single branch? Or what's kind of the magnitude here? It's quite a big spread in Europe. I think that it's directly connected to the close down of the society. So in that respect, I mean, I think the UK has been hit the most because UK has been totally closed for many months. So there is a direct correlation. Of course, also the countries which have quite a large FX business, foreign exchange business has been impacted that Norway, for instance, has had quite an impact. So it has the business mix and the closure in the countries, that's what's affecting. Okay. And the best performing countries in segments Europe, who were they in the quarter? We have Turkey, for instance, which are actually showing growth in the quarter. We have the Latin American countries also in a very stable phase when it comes to the top line. And then on the other side of the spectrum, we have countries like UK, Norway. Norway, depending on the large FX business, you have Belgium as well. And then in the middle, you have a large range of countries. Okay. Okay. Thanks for that. And then the final question for me on the U. S. If we look into Q3, we see that it looks like a second wave in some of the states in the U. S. Could that affect you negatively? Or have we seen the largest negative effects behind us still? That's a good question. We're following that day by day. You're right. We see that there is a second wave. How that is impacting, I it's hard for me to say. I think that we will be on this level when it comes to top line at least in U. S, give and take a bit. But that's more that's how I see the situation today. That can change, of course, from day to day. But we see a relative stable situation. But then after that, we think that U. S. Will be in a good spot going forward based on that society will open up. And as I said, many opportunities coming out from the SafePoint side, more outsourcing, the ATM side and things like that. Okay. Interesting. I'll just end up with one as well. SafePoint net installation in the quarter, is that the figure you can give us? Yes. It's above 1,000. So it's a very high number in specific given the circumstances. Okay. Excellent. And the goodwill write down in Europe, dollars 48,000,000 I think it was. What country did it relate to? We it's a mix of different countries in Europe. We're taking a bit here and there. But I mean, we have goodwill of €7,000,000,000 So it's quite a small number in that sense. But it's a mix in Europe. Okay. Thanks. That's all for me. Thank you. Our next question comes from the line of Johan Dahl of Danske Bank. Please go ahead. Yes, good morning. Just a couple of questions. I was just wondering if you could share possibly the organic growth in June for Europe when you claim to be profitable? And secondly, I was also wondering if you could describe a little bit in terms of FTEs what you have been able to do in Europe in terms of permanent redundancies to mitigate the weak sales and also what do you expect in terms of furloughs going forward? Yes. So the number in Europe in June is about minus 20%, about. And that's a big spread from as I mentioned, from country to country. So in that number, we're doing a decent profit. So and then we see also that we then June. So we are in a positive momentum in Europe going forward. When it comes to the number of FTEs, I'll hand over to Christian. He has full control over that. Okay, good. So regarding FTEs in Europe and during the quarter, we have furloughed a lot of people, of course. And at the most, we were at approximately 30% of the workforce within Europe. And you see when you look into the numbers in the report, we are down on the FD side slightly more than 15%. There are currently still subsidies available in our largest countries in Europe, and they are available for Q3 as we can see right now. So I hope that gives a summary of the situation. And what can you say, Christian, regarding sort of permanent cost out measures, decisions you have taken or plan? Yes. We of course, I mean, majority is furlough, but it also includes the FTE reductions also include permanent takeouts. Thanks. Thank you. Our next question comes from the line of Karl Johan Bonhoeffer of DNB Markets. Please go ahead. Yes, good morning. Good management of a difficult situation, I must say. Looking you gave us the guidance that April was down, was it 30% or something like that, but for the full group or 25% for the full group, slightly more for Europe. And now you say June was down in Europe for 20%. Could you just give us April and May numbers or the indication for it? And then maybe also give us some granularity if you are looking at, say, bigger markets like Spain, France, that is now is more out of this like Spain, France that is now is more out of this pandemic situation and the active close downs, at least what kind of developments you have seen in, say, volumes coming up to the end of the quarters in those markets? How quickly do they recover, so to say? I mean, I think that we were Europe was more hit than U. S. In the beginning and during the whole quarter. So I think we were down around 35%, 40% in the beginning of the quarter, and that's gradually been improving. I think that we see that the big countries in Europe like or the important all countries are important, of course, but if you look at France, Spain, Austria, Switzerland, we see nice improvements during the quarter. I think that UK still is a bit of a challenge due to the fact that it's been closing down. But the big country, Central Europe, is recovering quite nicely. And I guess, there is as you pointed out with the arguments of cash not spreading the virus and this, there is obviously a risk of some sort of permanent damage to the volumes in the segment due to this that cashless society takes another step forward and so on. Is it too hard to measure that at this stage? Or do you have any idea what kind of recovery levels we will get back to, so to say? I think that U. S. Is not an issue as such. And I think that we will see, as I said, a triggering of more outsourcing in the U. S. Going forward. When it comes to Europe, it's a bit too early to say. And it varies from country to country. I think that I don't dare to speculate. We haven't seen any impact from that as we speak. It's a more general close down and people are spending less money. That's what we see. We don't see any big impact of the virus and things like that. Of course, you can see signs on some shops in Sweden and so on and so forth. But that's more as a sort of specific country problem, I would say. In Spain and then in France and Switzerland and Austria, that's not an issue, I would say. And I guess from your point of view, if we come to some sort of, say, change to demand patterns, your cost structure, will you allow you to balance that out to some extent? Yes, that's right. I think that the thing which is very important is that we are not living on that. I mean, the cash level in the society is just one part of the equation. I think that the outsourcing the level of outsourcing is the most important. And I think that, again, that this event can trigger much more outsourcing from central banks, from commercial banks that ATM fleets will be outsourced. I think that this is that's something positive we at least bring with us. And I think that is what we're looking at to be close to the customers to pick that up, that outsourcing that will come to the market. Excellent. Fantastic development in the U. S. For you. You mentioned good customer inflow. And could you share some more light on that? No. I think that what we have had our philosophy or strategy has been to have high quality. We're not the cheapest in the market, to be honest. But we have had high quality and we have kept that high quality throughout the quarter and the pandemic. And that means that some customers maybe are not that happy with the some of the other providers and we see that they're coming to us. And that's a clear sign. What we also see is that more bigger banks and bigger retailers are now looking at continue or start outsourcing because they see that this we can do this so much better than them and it's clear signs of increased outsourcing in the marketplace. Excellent. And just on the margin, very strong margins the U. S, obviously, looking at 15 plus in the quarter. And you're still alluding to that there is a negative mix in that looking at CIT CMS mix. But obviously, as SafePoint is helping, not be helping than being the big part of it. Or is there anything else happening underlying in the CITCMS mix we should be aware of? No, I don't think so. I mean, no, no. I mean, we have I mean, the CIT volumes, I mean, the stops go down for sure. But when that's being compensated by more ATM work, it's being compensated, but we still have growth in the SafePoint side. So in that sense, I would say that rather the mix is positive, so less CAT, more SafePoint, more CMS, more ATM. So and that has helped the margin. And we see that the ATM business is because what's happening is that some bank branches have closed or they don't open up as many hours. And then the ATMs have been sort of instead of banks in a way. So that service has been increasing during the quarter in the U. S. Excellent. And finally, a final dividend decision for the current year. Is that something we should expect to be announced around the Q3 of the quarter? How should we see that? I didn't one more time. Yes. No, you're coming back with a final dividend decision. Obviously, you're still calling it postponed rather than fully canceled. Is that around Q3 we should expect that kind of communication? Yes, I think so, yes. Around Q3, beginning of Q4, I would say. Excellent. Thank you. And again, that's the Board of Directors' decision. That's not my decision, but of course, you're aware of that. Excellent. Thank you. Our next question comes from the line of Mikael Lufthdal of Carnegie. Please go ahead. Yes. Hi. So first, a couple of questions on the government grants. You're only mentioning Europe in this sense. Have you received any grants or subsidies in the U. S? We Christian here. We have not received any subsidies impacting the income statement in U. S. And no postponed payroll taxes or anything like that? We have postponed payments in U. S. That we have, but nothing that impacts the income statement. Okay. So, but it impacts the cash flow for the quarter then? Yes. Okay. Could you magnify that perhaps? I think in total, not going into segment, but in total, we estimate that we have delayed payments of $200,000,000 to $300,000,000 Swedish kronor. Okay. So the cash flow is held by $200,000,000 to $300,000,000 and that is only a loan that should be paid back in 2021, 2022 then, if I'm correct? Yes. When they are due, yes. That's true. Yes. Okay. And secondly, on the government plans then in Europe then, you're saying that it's still a net negative impact from COVID-nineteen. But as we are now sort of opening up, but we are in a new normal situation, How would you think that this is going to play out? When these government grants are runs out, there will still be some negative effects around, and it still is currently. So I would assume that you expect a negative impact throughout the year and perhaps even more than we currently see because the government grants runs out gradually during the next couple of months. I think regarding when they rounds out, I mean, there are specific country by country, some runs for the full year, some ends in October and some ends in Q1 next year. So it's difficult to say exactly where they will play out. But for sure, the COVID-nineteen for us this year will be negative because we don't get subsidies also for all the costs. We get subsidies for furlough and not also the total. I mean, there are certain rules what you get subsidized for, but not the direct cost. So it will be negative for us. But at the same time, of course, we believe that this was some kind of low mark to have this net of minus Thanks. And then again, in the U. S, it's an extremely resilient margin and very impressive, I would say. But you mentioned reduced overtime compensation and the customer mix. But is it anything else here? I mean, still volumes are down organically by almost double digits. So it's hard to see how the margin can grow in that environment without any government grants supporting the profitability. So is there anything else here that we are missing or any big contracts that have run out, which I know that you have sort of sorted out your CIT portfolio, starting to do so already last year impacting the margin. But is there anything here that explains this very, very strong margin? No, no. There is nothing straight. I mean, I just want to take that again. So top line, so we have more again, the mix, if we take the mix, less CIC in relative terms and then more ATM, SafePoint and CMS business. So you get a positive mix. We have reduced over time to a large extent. We have been very good at handling the staff situation in each branch, sitting every day and really, really making that very visible to everyone. So and then cut all other costs. So there's nothing strange. It's just the mix and a fantastic cost management, I would say. Okay. Good. Then also a follow-up on the shift to cashless or the what we hear at least, especially from the U. K, that the shops are not accepting cash and so on. Have you, in Europe and maybe this is predominantly in the UK right now, but have you experienced any smaller retail customers or restaurant customers actually any customer losses in that customer groups because they are no longer accepting cash? Is that anything you have seen so far? And maybe it's only the UK, but No, we haven't seen that. I mean, some of our customers have gone bankrupt, of course, but no one sort of terminating contracts. We have often long term contracts. Nobody is stopping any contracts. No, we haven't seen that, no. And when you see the volumes coming from, for instance, in the U. K, smaller customers in the U. K, are you seeing a very large drop in volumes from those customers? Even though I know that you have longer term contracts, so it takes a while before they are well, potentially deleted or ends? No. I mean the issue in U. K. Is that closed shops have been closed. That's the big issue. And of us. But we haven't seen anyone or anyone, I would say, in any substance that customers have terminated the contracts. We haven't seen that, no. It's a closure of pubs and cafes and restaurants and all of that. Hopefully, that will open up, and then we have a totally different situation. Okay. Okay, thanks. That's all for me. Thank you. Our next question comes from the line of Daniel Hansen of SEB. Please go ahead. Thank you and good morning. Two additional questions from me, if I may. First one on Europe. You have very efficient European operations. And despite this, you're at a loss in Q2. So my question is really how is your smaller and often less efficient local competitors coping this tough environment? And how do you view the potential for market share gains going forward here? That's right. I think despite the loss in Europe, I think you're being quite fast in reacting. And it's not always up to us. When you furlough people, there is sometimes you have to even negotiate with unions, you have to follow some procedures from the government and so it takes a bit of time. But I think that, as I said before, I think there are 2 factors that talks in our favor when it comes to the sort of the competitive situation. 1 is that we have been open, we take market share. We see that in some of the countries. That's number 1. Number 2, I think that some of the smaller competitors will struggle and that could be consolidation game going forward in some of the countries. We see signs of that already. And I think that would be even more obvious also in the later part of the year. So I think that with our model, our service level, that is very positive going forward for us. Thank you. And lastly on SafePoint again, can you say something about your feeling around the order book and pipeline on Safe Point specifically going forward, given that it might be difficult to meet customers during this period and many customers might be reluctant to enter into new longer term contracts and commitments. Could you give us some flavor on that, please? Yes. I see a very strong pipeline in the U. S. And also the installation in Q2 was strong, surprisingly strong, I would say, but that's good. And then I see a very strong pipeline going forward. We have a good offer in the market. I think that also, as I said, many customers now take this opportunity to look into the processes, automate as much as they can. So I'm very optimistic about the future when it comes to SafePoint in the U. S. Okay, great. That was it for me. Thank you so much. Thank you. Our next question comes from the line of Arish Aslafalo of Goldman Sachs. Please go ahead. Hi, good morning. Just 2 from my side on behalf of Matti and Gergo. Let's first one, you mentioned M and A opportunities in Europe and the consolidation opportunities. Are there any specific ones, regions that you think are looking interesting or specific market segments? That's my first one. No. I think that some markets in Europe are quite consolidated, and then it's more of a market share game. But there are some markets in Europe that are not that consolidated. There are quite some players, smaller players left. I think that in those countries, there will be opportunities. Not being specific about all the different countries, but there are opportunities coming up for sure. And we are there. And of course, then we need to find the right price for that asset. And that can be a bit of a struggle, of course, in these situations. But there are opportunities for sure, and that this situation would trigger those opportunities. And would M and A be on the agenda for 2H? Or is that something that's on hold during this uncertain times? No, I think that some discussions have started up. I think that will be competitors might struggle really, and then it will be even more speed. But I would think that those discussions will come up during the end of this year, Q3, Q4. Okay. Understood. Very clear. Secondly, on SafePoint, you highlighted some restructuring of customer contracts. I was just wondering if smaller sized customers have had difficulties to pay and if you could give some details around the numbers there. No. I mean, that's more a general comment that, of course, we want to keep these customers some customers struggling, and then they can postpone the payments. They don't need to pay the bill maybe for a couple of months. We help them with that to support their cash flow. And that's what I meant with that comment. So and that's, of course, impacting the growth of SafePoint in the quarter, but that will come back. It's for more for us, it's more important to keep these customers and help them. So that was my comment referred more to that situation. Of course. So there hasn't been many customers that have completely wanted to kind of have gone bankrupt that haven't been able to fulfill their contracts? No, no. Okay. That's very clear. Thank you so much. That was all from me. Thank you. Our next question comes from the line of Thomas Graf of Handelsbanken. Please go ahead. Yes. Hi. Thank you for taking my call. And just as you mentioned, you expect improved margins in Europe going forward from the low point in April and so on. When on the time frame sort of, if you could just give some flavor on how long it will take to do you expect to things to normalize in Europe? Or is it normalized already? Or if you just could give some flavor on the current situation when it comes to yes, compared to the low point in April, where are we now sort of? We are in a much better place right now. Top line is coming back gradually. It's not where it should be. It's not where it was before the pandemic for sure, but it's coming back. We have taken action on the cost side. I think that given the situation, I think it looks much better than, of course, in April. But we are not back. That's for sure. How long that should take? I don't know. I think that the traveling needs to pick up a bit as well. I think that we have quite a business in foreign exchange and that's for obvious reasons that's down. I think that the activities in the economy need to pick up even more. But again, as I said, if we look at countries like Spain, it's much, much better than it was in April. And also, when looking at France, Switzerland, Austria, many of the big countries. Okay. Yes. And of course, traveling has been hit very hard. But now you see a bit that is taking up in pace, but still very, very, very slow. And would you say it's would you say travel is do you get anything from travel now? Or will that take long to recover, do you think? Yes, that will take some time before it picks up. I think that what we see now is that the local economy is like the lower local tourism, the local consumption is picking up nicely. We want people to travel, of course. We need that to happen. But as I said, bigger countries in Europe are in a much, much better position now than they were in April. And that's nice to see. All right. Thanks for that. Thank you. Our next question comes from the line of Karl Johan Bonhoeffer of DNB Markets. Please go ahead. Thank you. I just want to come back to the acquisitions of Nokas and the Prosegur French operation. Do you feel that you're going to be able to complete those integrations during this year? Or do you believe it will drag on into 2021? I think that the integration as such operationally will be depending, of course, on the situation, but we're done this year. The financial effect, you will see more next year or you will see them next year. Excellent. And on the Phoenix ATM acquisitions, have you got any feedback on when that could be hopefully closed? We expect that to be in September. That's at least the information we have right now. Excellent. And listening in to G4S the other day, they are obviously contemplating a major restructuring of their U. K. Operation. Do you see any need for any structural big moves for you in the U. K. Given the demand situation there? It's a bit too early to say. Of course, we have all the different plants in the drawer, but it's a bit too early to say. We'd like to have more facts on the table before we take any such decisions. So I need to come back on that. But we haven't pulled any decisions right now on that one. And for you in the U. K, would you consider it being more of an optimizing on branch level than doing something structural to the footprint, if you come to that? Yes. I mean, for sure, we're doing everything we can on the cost side. I wouldn't rule out that we do some structural things in the UK, but it's a bit early to say right now. I need we need a couple of more months to look at the situation. As I said, I don't rule out that we do any structural things in the U. K. It's a bit too early. Excellent. And on your comments on SafePoint and the installations that you still saw in Q2, it's not the fact that you have been forced to postpone the, say, installations and these kind of things into the second half of the year? You have been able to basically do what you were supposed to do during the quarter? Yes. Looking at the numbers, we have done excellently in the quarter when it comes to installations. I'm a bit surprised myself by the pace. But honestly, I think that I've seen less impact on the SafePoint side than I expected. So both revenue, installation and the pipeline is in a very good shape. Excellent. Thank you very much. Thank you. And our next question comes from the line of Beltran Palazzoello of Santa Lucia Investment Managers. Please go ahead. Your line is open. Hello, good morning. First of all, I would like to thank all the hard work from all the employees of Lumenis. And then I have 3 questions. 1st of all, regarding to Europe, what kind of volume do you need in order to have the same margins as, for example, last year? It seems that all the financial community seems to look at your margins of Europe as permanently much lower. So if you guys could give me a little bit of feedback. Then my second question is regarding M and A. You gave a little bit of color that it should be in the Europe region. If you could also give more color regarding, for example, M and A, what returns does that have, what strategic things you want to capture? And then, for example, buyback, it seems that everybody thinks that cash is not going to be able to well, nobody is going to use cash for the foreseeable future. And then maybe in the long term targets you gave in London a couple of months ago last year, do you still think in a more normalized situation, maybe the revenue targets will have more to do with how the pandemic evolves, but maybe in the margins, you're still confident that with a more normalized year, you can hit the margin targets? Thank you very much. Let me just start with I'll pick I don't take Tim in the same terms that we mentioned. Let's talk about cash. I think that as I said in the beginning, there's never ever been so much cash in the system, both in Europe and the U. S. And I think that I've been here now 4 years, and before that, my predecessors, Dave, I've been asked the same questions. I think that already in 1950s when the first Diner's card came to the market, everybody said the cash is dead. I think that that is to take it too far. We don't see that anymore. There are many, many people unbanked, many people that are underbanked, and cash is very resilient, has been for many, many years. So I think that it's way too early, and it's not correct to say that we go into the cashless society. Of course, there are differences country by country. But in general, I think it's too early to get into those discussions. When it comes to M and A, I think that we are continuing our path when it comes to focusing on the Europe, U. S. And LATAM and also on technology. So and that has not changed for this strategic period. We will focus on that. I think that there in all of these areas, there will be opportunity there are already opportunities and will open up even more opportunities. So I'm quite optimistic about being able to pursue an even more sort of aggressive M and A agenda going forward. When it comes to the targets, I mean, we haven't sort of any new guidance. I mean, the targets for 2021 still stands. We are working day and night to get to those targets, and we haven't changed our mind in any way on those targets. So we are just continuing to pursue that route. When it comes to margins in Europe, I think that's why I mentioned the number. We are quite sort of careful on mentioning revenue numbers and so on. But that just to give you a flavor that on these numbers mentioned 20% down, we are doing a nice profit in Europe. And that is the guidance I just want to give on Europe and the margin situation. Sorry to interrupt, but maybe you said you're doing a nice profit, but let's say if your volumes next year were, let's say, 7% or 8% down from the previous peak, would you be able to make, let's say, margins at the next to past year? Or what kind of volumes do you need in order to with all the cost cutting measures to make the same margins of last year in Europe? I think that's quite a difficult question right now to answer and maybe a bit too detailed. I'll stop there with the guidance I've given on Europe. Okay. And so you of course, this company is always conservative, but you feel conservative when you see all the numbers from all my colleagues that are in the call, what the analysts said, but they don't own shares. So you're comfortable with the share being, let's say, half of the value. So you're not being with the margins over last quarter in the U. S, you're not comfortable by saying that next year margins in Europe should be, let's say, alike from 2019? I said, we don't guide on exact numbers. We guide on we try to give as much information as possible on the situation and the quarter. It's a very uncertain situation. It has to do many things. I mean, how much subsidies do we get, what extra cost do we have, how does the cost measures beat and so on. I think that what we're guiding on is still that we will be on the margin for the group of 12% to 14% for 2021. That's what we have given. Okay. Thank you very much. And thank you again for the hard work of all the team. Thank you. Thank you. And we have no further questions on the line at this time. Please go ahead, speakers. All right. Then I would say thank you very much to everybody. Thanks for all the good questions. Thank you. Take care. This now concludes our call. Thank you for attending. Participants, you may disconnect your lines.