Earnings Call: Q1 2019

May 6, 2019

Good afternoon, everyone, and welcome to our Q1 call. We have a busy day today. We've had a board meeting in the morning, and now presenting the results. And then we have an AGM here in Stockholm, which is starting in a few hours. So Bart and I are going to try to be a little bit brief for the normal and wrap up at 3 o'clock, but still giving good amount of time for questions. And if we are looking then to, to the results on Q1, we've had a good start to the year. We the 7% organic sales growth. All the segments have contributed to the improvements. And as we have commented in previous quarters, we have continuously tight labor markets, but we have been able to balance the wage cost increases with price increases. And good top line growth, together with cost control, contributed to operating results a real change of 11% in the quarter, which we are proud of. And we also had improved operating margin to four point 8%. And in terms of earnings per share, we have a positive growth of 3% real change. Our cash flow improved significantly in Q1 versus Q1 last year. But cash collection and cash management remain important areas of focus for us during 2019. We should also note that we have adopted IFRS 16 leases without restatements of the comparative periods. But if you're looking then at the quarter, all in all, we see that we are off to a good start to the year. And then returning to the strategically important area of security solutions and electronic security. And here, we continue with good activity, security solutions and electronic security in Q1. This sales now accounted for 21% of the total sales of the business and 17% real, growth or real sales growth. And, and obviously, as we have had a quite a strong growth, the base also keeps getting bigger, but a good momentum in terms of solutions, electronic security. And we also completed a few important acquisitions during the quarter that will help and enhance our protective services offering in a few important markets. And starting with commenting on the StaySafe acquisition in Australia. And this is an important for us because, we will essentially strengthen our protective services offering, improve the guarding service delivery, but also then, with a state of the art monitoring capability, also be able to offer innovative services and alarm monitoring in our solutions. If you're looking at all Cooper in the UK, another fine company that we have partnered with for a number of years, And with Orkrupper, we would also then strengthen our protective services capability in the important UK market. So we are very happy to welcome the teams from StaySafe and All Cooper to the Securitas team as of Q1. But one of the most important priorities for us is to continuously strengthen our protective services offering. And to do that then for the benefit of our customers. So as in previous quarters, I would like now to share a new customer reference case. And in this case, it's a, a reference case from the Danish company, Mashk. So if we can please play that video. When we started was a concept we are still moving boxes from, waterside to Landside. We try to do that as fast as possible with the help of automation. Afternoon. Horrible. If you wanna build the safe and the most, you can just automate a tunnel in the in the world. How do you start? It has never been done before. So they're stepping up their efficiency. It creates other risks. So we'd listen to those risks and dealing with new RVs to mitigate those risks. A proactive partnership. We have to learn and recruiters have to learn too. You get to a higher level. Technology. We are a specialized security and safety company. We perceive ourselves as knowledge leaders. And we try to use the knowledge what's inside to help us to do it the best as possible. Mars was making a shift towards automation, and make the combination between people and technology. Security has already, for the last 10 years, on that road, usually security and safety are separate surfaces within, companies. We will combine the 2 to make it more efficient. The best way to be successful is to communicate openly and transparently to say what you do and to do what you say. It's a serious job need serious people with commitment. That's why this is global. Excuse me. Good. So this, I believe, is a good example, where we started with a risk assessment sitting down with Mahesh understanding their needs. And then we have that developed. As you can see in this, video, a comprehensive solution, leverage, and number of our protective services. What I also believe is good about this case is you also see in that we are able to deliver, this solution not just in one location, but in, in numerous locations, in different regions and Countries around the world. So we're leveraging the presence of Securitas, but also then to the great value our customer, in this case, Maashk. So with that, let us now then turn to the performance in the different segments. And starting with North America, we'll be a solid start of 2019, which is 6% organic sales growth despite strong comparatives from last year. But we should also highlight that we lost a few large contracts in the quarter but we have healthy overall commercial activity in our North American segments. And if we then turn into profitability, solid improvement to 5.7% in the quarter. And this is based on good performance across all areas of the business. And looking then at Europe, we had solid growth also in Europe in the quarter, and organic sales growth came in at 4%. And this was supported by strong contribution from Belgium, Germany, and Turkey, but some negative impact from France and Sweden. If you're looking at Security Solutions, electronic security, we had 22% of the sales in the quarter. From Solutions And ES. If you look in then from a profitability perspective in euro, also on improved 5%. And this was supported by good leverage and some impact from the cost reduction program, which is going according to plan. So the margin was hampered by startup costs in a few contracts, but also the profitable contract in Sweden and We also face a challenging or continued challenging conditions in our French market. And looking then at the Ibera America, we had a good quarter overall and strong support from solid performance in Spain. Spain once again is setting a very good example in terms of top line as well as bottom line development. Organic sales growth in the segment of 19% in Q1, and we had strong double digit growth in Spain. If you look in then at the profitability perspective, Spain, like I mentioned, are clearly contributing. And this is very much thanks to our successful Solutions business. But we should highlight like we've done in the previous quarter that we have some short term contract and we highlight that more to be prudent because we do not know when those might be terminated. And the operating margin in Argentina burdened the results in Q1, as we commented in the previous quarter, we are not happy with the performance and we expect continued challenging conditions in the near term. And with that, I am happy to hand over to you Bart for some more details on the financials. Okay. And many thanks, Magnus. Before we go into the numbers today, it's a bank holiday in the UK. And to the people based in the UK. I'm very sorry for breaking into your bank holiday, but especially thank you very much for being with us here today as well. Thank you. So let's take a look into some further financial details into the quarter, and we start with the income statement and some details around that. I believe, as Magnus said, also that we had a very good start to the year. And as of Q1 now, we have adopted the IFRS 16 which is the standard that deals with leasing contracts. In essence, as of 2019, all equipment that is leased is considered as assets for accounting reasons. We have implemented this standard without any restatement of comparatives So all of our existing contracts we have accounted for as if they started on January 1st. There is an effect on our income statement. And as you can see here in the small table in the right upper corner, there's a positive effect of plus 17,000,000 Swedish kroner on operating result, but then a negative effect on financial items of 36,000,000. So a net negative of minus 19 on income before tax. And then moving to the next item here, we accounted for SEK 20,000,000 as items affecting comparability in the first quarter. And this, of course, relates to the transformation programs we commented upon before. We have now made a further level of, detailed in the planning related to 2019. And we currently expect that we will recognize around SEK 200,000,000 of items affecting comparability for 2019. Everything depends a bit on how fast we can implement certain matters and when exactly will we incur then the cost connected to that. Then the remainder will come in 2020 with potentially some costs running into 2021, or we will take everything at the end of 2020. The total cost of SEK 650,000,000 is still the relevant amount to account it. Then, as to the financial income and expenses, that is, minus sek139 1,000,000 in the quarter, as said before, be negatively impacted through the adoption of IFRS 16 leases for 36,000,000 and then further some negative impact compared to last year through increased net debt and then also the development of the U. S. Dollar currency rate compared to the Swedish kroner. Let's go further down then and we take a look at our tax line or current estimate is that the full year group tax rate in 2019 will be around 27.8 percent. That is an increase compared to 2018, and it's mainly due to reversed effects from the U. S. Tax reform. And this is then related to the introduction of the tax on foreign payments, the so called beat. This beats then reduces quite importantly some of the positive effects from the nominal tax reduction in U. S. I should also add that the beat by itself makes the calculation of the effective tax rate a bit more difficult to forecast as it is more sensitive to certain elements in the income statement. You then notice in the bottom here, a small difference between EPS and EPS before items affecting comparability relating, of course, to the earlier mentioned items affecting comparability of SEK 20,000,000 related to the transformation programs. Okay. Then we turn to the next page and we take a look at the effects from the different currencies. And as always, the numbers here mentioned to the right are the foreign exchange end rates in Swedish kroner measured at quarter end and compared to the same quarter last year. And as you can see here, the U. S. Dollar has further strengthened to the Swedish kroner during the quarter, And at the end of the quarter compared to the same quarter, it means an increase actually more than 12%. The euro during the quarter was more around 10.3to10.4. So more stable, much more stable compared to the U. S. Dollar. The Argentina peso continued continue to be around minus 50% compared to 12 months ago. And the drop is especially then that happened since May to September last year. So then, it has been more stable since October, you could say, the Argentina peso. Due to then, especially the effect from the U. S. Dollar, as you can understand, or quarterly consolidated income was positively affected comparing to last year. And so our nominal numbers got quite some tailwind from the currency. On sales level, there is a 6% tailwind, and that you can see from the difference between total change and real change and on operating result, the difference was 7%. And then I would just also like to point for second at the deleverage that happens in between operating result and net income, mentioned also at the outset presentation, the real change on operating income level is 11%, while the real change on EPS before items affecting comparability is 3%. And that difference is then entirely due to the higher financial items and also due to the higher tax rate. Then turning to the cash flow and the balance sheet, it shall be noted that the net cash flow is not impacted from IFRS 16. So the impact is on the income statement and on the balance sheet, but there's no impact on the net cash flow. However, while the net amount, I mean, the net cash flow is not impacted, some of the individual lines are actually impacted in the calculations. We see here net investments of minus 67 1,000,000, and that results stems from investments of minus 707 and reversal of depreciation of 6 40. One shall then understand that IFRS 16 leases impacted the investments with a bit over SEK 200,000,000 actually and it impacted the reversal of depreciation also with a little bit over SEK 200,000,000. So with IFRS 16, our CapEx gets now inflated and and that is around from around SEK 2,000,000,000 per year to an amount now of more SEK 2,900,000,000 under the new measurement under the new accounting. Meaning that you could, for instance, expect a sizable impact in a quarter where we would sign a new rental contract for a large offields building with a long duration that could then in that quarter have a larger impact on the measurement of the investments in that quarter. As you know, there is some seasonality in our operating cash flows. We had a substantial cash flow improvement compared to the same quarter last year, So a good improvement, but all in all, we are not not fully happy yet with the DSO achievement. So we have further analyzed any effort worked with issues and action plans are ongoing. Moving to the next slide. And we look at the net debt, and this stands now at SEK 19,300,000,000, up from SEK 14,500,000,000 at the beginning of the year. And this is here where you need to get a little bit more acquainted actually with the numbers after IFRS 16 also. The main difference relates to the implementation of IFRS 16, which made a net debt increase with almost CHF3.5 billion. Then of course, we have the development from the operating cash flow, as just explained. And then the net debt was also impacted from the foreign exchange development largely from U. S. Dollar. As you can see here on the slide, that added SEK451 1,000,000 in translation to net debt since January 1st. Then to the far right of the slide, the net debt in relation to EBITDA is on 2.8 and that is after IFRS 16. As I said, IFRS 16 had a quite substantial impact because now the net debt fully includes the entire effect from IFRS 16, while, 10 or 12 months rolling EBITDA only includes 1 quarter with the effect from IFRS 16. The net debt to EBITDA before IFRS 16 stands at 2.4. So only by including more quarters with EBITDA measured after IFRS 16 or Revlet shall come down by itself with 0.3. And then with about 0.3. And then the seasonality of our cash flows will normally increase the leverage at Q2 and then go down again in the second half. Of the year. So as a summary here, there's a net negative impact to the income statement. We do see an important impact to the balance sheet with an increased net debt of assets, of or increase of net debt and assets with about SEK 3,500,000,000 And then the EBITDA, of course, changes also substantially because previously what was operating expenses have now become depreciation and interest. Then there is no impact to the net cash flow, but we do see increased amounts recognized for investments and for reversal depreciation. For your reference here, we have included some KPIs before and after IFRS 16 so that you can see the impact and the development of the different KPIs. This table, you will also find in the note 2 to the report, together with all the other explanations on IFRS 16. The good news is so to say that the rating agencies followed already for quite some time the KPI is pretty much in line with how IFRS 16 treats leases. And Securitas is rated BBB from Standard And Poor's, but maybe you noted that our outlook was changed recently from stable to a positive outlook. And with then this positive outlook, I would like to hand back to Magnus, but also would like to say one more thing. We have reworked a bit the quarterly report with the main goal to make it as clear as possible for for the readers, for the audience. We worked a bit with the tables and headers and all the different, smaller indicative. And I hope you like it. But I wanted to especially take the opportunity here also to thank all of our teams, the people that help reducing the numbers on the tables and wording. And so and many thanks for that to all of our teams. And with this, I'm happy to hand back to Magnus. Very good. Thank you, Bart. And you have no small role yourself in that work. So with that, before we open up the Q And A, I would just make a few updates related to the strategy work. And if you're looking at the position that we have today, we have a strong position. And, as we have shared in some of the previous update we have a good position and presence, but we also see good opportunity to leverage this presence and our customer relationships to drive the development in the next phase. And part of this is obviously related to how do we work to, to, to strengthen our protective services, our ability to respond The other one is then also related to how do we leverage the vast amounts of data that we generate to be able to enhance the quality and the security to our customers. And so when you're looking at what are we focusing on in terms of delivering 2020? It's it's focused on 3 different areas. 1 is on our client engagement. And this is then looking at all the the, the ways that we are interacting with customers. Second one is continue to strengthen the protective services leadership. And like I mentioned earlier, we are happy to also then complete a few new acquisitions in Q1, and we're continuously looking at acquisitions that are attractive to, especially then enhance our electronic security capability. And then the last effort is, is related to modernization and digitalization and also then enhancing efficiency. And a lot of that is important because that is where we also have the enablers of building a platform, which will enable us to, to launch more digital products at scale as we go forward. But if you then look, looking back few months in early February, we announced 2 major transformation programs to help them drive these changes. And the objective with the 1st program is to radically modernize our global ISIT, building a strong platform and capabilities throughout the group. And, and we do that with 2 main objectives One is efficiency. And the other one is to be able to launch more digital products and to scale those across countries and regions more quickly. And the second program, which we are in the middle of as well, is our North American business transformation program where we're looking at a number of different activities to help and operate our business in a more effective way. And also these programs are long term programs as we have communicated previously, but I'm also glad to say that we are progressing according to plan. So when you look at Securitas today, we have a strong foundation And we also have very exciting opportunities ahead. So looking at the lower parts, which is representing our foundation, We are looking continuously at how do we strengthen our core, which is our guarding. We continue to invest in what is here the middle layer in terms of our protective services capability to ensure that we don't only have the best offer to the customers today, but also in the future. And now taking the first steps in terms of launching more data driven products and driving more data driven innovation for many years to come. So to conclude, we've had a good start to the year, solid growth and year on year operating results improvements, and we continue to invest in our strategy and are also excited about the opportunities that we have in the mid and the long term to to ensure that we continue to lead the development of this industry and that we bring the best value to our customers. So with that, I think that Bart and I are happy to open up for questions. But like I mentioned at the beginning, we have an GM here in Stockholm right after this call. So we will try to wrap up at the latest at 3 pm, but now then happy to open up for questions. And our first question comes from the line of Shireg Vadia of HSBC. Please go ahead. Your line is now open. Hi, there. I've just got 3 questions. Firstly, could you talk about where the broad base of organic growth came from? And if you can if you'd expect to see similar rates throughout the year. Second question, what level is the current, NCE churn rate? And what mechanism would you use to pass this, the wage increases on with clients going forward? And finally, on the M and A activity, how do you view M and A in the US guarding market given the recent activity by the some of the larger competitors in the space? Thank you. Yes. So thanks a lot for the question. If you look at your first question, when you say where is it coming from, the fact is that this is fairly broad based growth. We have contribution from, from all the segments. We also had, when you're looking at, at some of the terminations, etcetera, they did happen until the end of the quarter. We mentioned a few contracts in North America, for example, so they did not have any material impact in Q1. But I, I would say that the, the, the, the growth is really coming down to the fact that we have a good offering generally speaking, good commercial activity. And, and we're also retaining and pretty good at retaining our customers. But then there is obviously competition, and that is the reason that we have lost a few contracts as well that we would have liked, that we would have liked to keep. Maybe I can save question number 2 for you later on, Bart, but if you've look at the 3rd question, which will stand about guarding acquisition interest in North America if I understood it correctly. We have a very strong team in North America. We're winning organically. And when you look at where are we investing, where it's strengthening the other parts of the protective services. We have strong guarding capability. We have invested significantly, as you know, in terms of the Diebold and then last year closed the Kratos acquisition. So, from my perspective, regarding acquisitions in North America is not a high priority. And if you look then and extend that question to a global perspective, the focus really the more on electronic security and some of the other protective services more generally when we look at our acquisition interest. But you could see other markets though, but that's a different question. You feel free to ask that later on, where we could be more interest it in, if good opportunities come up, but not primarily guarding in North America. Maybe, Bart, if you want to comment on the second question. Yes. On the employee churn as published in the annual report, we are at around 40% for the total for the totality of the group. And that is pretty much in line with the number from the year before. I should mention, however, that we had done a small re measurement there, because our number before included, you could say, temporary staff as well, that for some reason was measured as churn. But it had nothing really to do with churn. Probably if you take it from a legal angle, yes, those people were coming in and out from the company. But so that is something we have corrected, but that is only a minor correction. But on the say it's on the same level as last year for the totality of the group. You questioned also about the wage increases, and yes, we pass on that, of course, in the prices. As mentioned about before, we have had quite some discipline and focus on this throughout the years. In, in, you could say on average, or price increases are around 2% during any cycle. And then that turns out to be a bit higher in good economical times to between 2% 3%. And last year, we were already in the higher end of that 2% to 3%. And now this year, it seems like the price increase will also be a bit ahead of actually where it was last year. Q1 and Q2 are very important for our price increases. That is the key quarters. And so far, we have been good. We have been on par. But of course, also the last negotiations are always the toughest ones, I should say, So we will come back to this matter also at the end of Q2 then. Our next question comes from the line of Edward Stanley of Morgan Stanley. Please go ahead. Your line is now open. Thank you. I'll try and be quick. A couple if we try to break down the 17% growth in solutions and electronic security, can you give us an idea of which geographies that's predominantly coming from? And secondly, in Embara, Latam, you mentioned in the coming quarters or the near term, how have you described it? Are you that's remained challenging. Can you give us a feel for how many quarters before you think you turn the corners there? And finally, on IFRS 16, because of the leverage increase. Does that change anything about the way you think about M and A in the coming year or 2? Thank you. Could you repeat your last question? Of IFRS 16, if that I mean, how that affects leverage and and if that has an impact on the M and A thinking. Yes. So thanks for the questions. If you look at Solutions Electronics Security, we have healthy growth of 17%. This growth is, and the momentum is pretty good across the different segments. Obviously, you have, part of that is organic. Part of that is also then helped by acquisitions. But when you're looking at all the different segments, it is fairly good momentum across the board, which is important and it's a good thing because this is obviously an important of our strategy that we continue to drive, to, to really increase our solutions, electronic security share of the total business. If you look at the second question, I think you asked about the Beer America and Argentina, Well, we have not been happy with, with the development in Argentina like we communicated in previous quarter as well. So support to this has been macroeconomic conditions that remain challenging, but we've also done some leadership changes as well. And And, I mean, we we have kind of a long cycle business. So so, typically, when we have some challenges, it it typically takes a little bit of time until you're really back to a level where you want to be. So I think that is as much as we can say, it's a bit difficult to say at this time if it's a matter of 3 or 6 to 9 months, something like that, but this is what we see, and, obviously putting quite a lot of emphasis on, on, improve in this as we go forward. Maybe parts you want to take there for a 16? Yes. I mean, there's an impact now on our leverage as it is calculated, but as mentioned before as well, the rating agencies already calculated in this way. So, from that perspective, there's no real impact in the way we should be rated. And that is, of course, what is important also when it comes to acquisitions and the capacity we could have there. By itself, the the the, the real, effect from IFRS 18, once we have been through the cycle, so to say 4 quarters further down the road or 3 quarters, additional to this first one, we will come back then to around 2.3,2.4. So that is a very normal level of leverage we have seen before. And then depending on the cash flow, during the year, it could even be further down from the 2.3,2.4. So there is no really big effect to be expected from, from IFRS 16 on our acquisition capacity Excellent. Thank you. Thank you. Our next question comes from the line of Bilal Aziz of UBS. Please go ahead. Your line is open. Good afternoon. And just two from my side, please. First, in Europe, I think you suggested some large contracts or a drag due to ramp up costs, and can you give a bit more detail on where these are based and how you expect that to phase through the rest of the year? And the second one, just a bit of a clarification, Bart, I think you said, GBP 200,000,000 of transformational costs this year and the remainder of GBP 650 last year? Is that just clarifying that correct? Thank you. Yes. So on the first question, Bilal, we we have won a few contracts. So they're helping the organic sales growth, but like, like we've highlighted, they're broadening the margin in Q1, and we see that there will be some impact from that as well in the near term. So that is, as we are optimizing and building up and scaling up according to those contracts. I should mention as well that we, we highlighted in the previous quarter that there is one larger contract in France that we communicated 3 months ago, which is terminating now during Q2. But this is obviously part of the ongoing business We have a strong offer. We have good commercial activity, but we highlight this because there have also been more substantial impact from this contract. Do you want to take a second? Yes. On the items affecting comparability, it is exactly as you phrase that Bilal, the totality for the 2 programs is still around 615 in line with what we have talked about before. The impact for this year is a bit lower maybe than what we have been thinking before. The reason for that is that, yeah, until we could disclose this to the world, These were insider projects, with an insider registration on them. And then of course, now we have been able to answer into the next level of detailed planning And then for this year, we plan then that we should have around SEK 200,000,000 of items affecting comparability for 2019. Our next question comes from the line Hi, guys. I think a lot of them were answered there. I was just wondering if you could give me any more color on the loss contracts in the US stable near the end of the quarter. Wondering if they are significant enough to where we should be considering any sort of impact from either a growth perspective margin especially for both in the coming quarters within that division? And then if you could just reiterate the staff turnover and maybe if if you could give any color on a division basis, how that's moved, that'd be great. Yes. So thank you, James. I mean, they are a few large contracts, and that's the reason that we highlight that we don't specify specific numbers So there will clearly be an impact, but this is also the reality. I mean, some years, we might lose a few. Some years, we do not now we have lost a few, and that's the reason that we highlighted. I should also, emphasize that we are meeting strong comparatives as well in the second quarter in terms of organic sales growth. So I think that's something which is also just important as to keep in mind. Yes. And maybe to add, Magnus, that effect for North America is expected more to be on the organic sales growth than on the margin. On the staff turnover, Yes, I commented that the number is 40 for the totality of the group, and we have not split that out per division. We have not reported on that. So we will not comment on it either now in the call. Thank you. Our next question comes from the line of Karina Elmgren of Handelsbanken. Yes, hi. I have two questions. One is regarding the cost savings program that you have in Europe that you say is going according to plan. How should we think about it going forward? Do you expect the effect to be the same in the coming quarters? Or do you expect the positive effect then to increase going forward? And the second question is related to the to the contracts that you mentioned. Did I understand it correctly that the big contracts in North America that you have lost was towards the end of the quarter? And is that the same for Sweden, where I think you also mentioned you lost the contract? And then if you could maybe say a little bit about in what sectors these contracts are? Thank you. Yes. So if I start, Karina, the impact from the cost reduction program in Q1 in Europe was around SEK 20,000,000. And we're expecting a gradual increase of that for the remainder of the year. Just to give a fairly clear view in terms of where we are. If you look at the contracts in North America, yes, it's correct. They were towards the end of Q1. And so no material impact in terms of the Q1 figures. And if you're looking at Europe, and more also the reference and the comment that we made related to Sweden, That's the bigger contract, that we terminated end of last year. So that will have an impact on a year on year comparison basis up until November or the December timeframe this year. Then I'm not sure. Was there another question related? I could just add that the gradual built up on the saving program expect to have around SEK 100,000,000 of savings for the totality of the year. Yes. And the larger contracts in North America there, they stopped actually on 1st March. That was when the impact already happened. Okay. Thank you very much. Thank you. Our next question comes from the line of Karl Johan Bonavia of DNB Markets. Please go ahead. Your line is now open. Yes, good afternoon. Sorry for coming back to these lost contracts, but just a final one of those are they in the technology space, or are they pure guarding product contracts we are talking about? And then also on the business transformation study that you are talking about doing in Europe to see if there's the same kind of opportunity as you have found in the North American operation. Have you come to any conclusion there? Yeah. So if you look, the North American contracts are primarily guarding contracts. If you're looking at the contract in Sweden, that was a profitable contract and also then a mix of different protective services. And then in terms of the second question, Karl Johan, you asked about the transformation programs. And you mentioned before that you were looking to do a case study for the European operation, if that was a similar opportunity? We are right in the middle of that work. So we will come back as we previously communicated in the second half of this year with more information. In terms of what is feasible or not to do in Europe. And the main guidance there will be the return on investment over a longer term period. Absolutely. But if you look at your business structure in North America and compare it to Europe, do you think there is a similar kind of group wide European opportunity as you have found in the U. S? Or it would be more country by country? Yeah. So so if you look at North America, it's obviously, the the way that we operate and and also then when you look at the the underlying dynamics, it's one big country. And then you have Canada and Mexico, we have more of a shared service set up and structure already in place in North America. And if you're looking at Europe, we have been growing more on a country by country basis. So the starting points are quite different. And that is also the reason that we are taking the pre study and really analyzing this carefully, before we are designing and engaging and saying this is what we believe in it to do in the short, mid and the long term in Europe. So the starting points, I think like you correctly assume are quite different. Our next question comes on the line of Alan Wells of Exane BNP Paribas. Just two very quick ones, just around the Evo America business. I'm not sure if I missed this earlier, but can you quantify the benefit from the short term contract uplift that you touch on in the report. And any sort of comments you can make in terms of timing, will there still be a benefit in Q2 or do they rolled away quite quickly? And then second question, just also just on Spain, obviously, you're still seeing pretty good growth there. I don't know if you could just sort of quantify what underlying market growth looks like in Spain at the moment, and exactly who you're taking share from or why you're taking share in that market versus peers? Thank you. So the Spanish contracts, I mean, the short term contracts that we mentioned There is obviously a certain significance when I look at the total impact, but I should also mention that we have strong overall momentum in Spain. And so a lot of the progress that we are making is coming ongoing more normal long term part of business, if you will. So I think that is one important clarification. So that is one. If you're looking then at our Spanish business, I think for those of you who have followed us closely over a number of years. I think this is a very good example where we had a very tough situation in the middle of the financial economic since been, if you're going back to 2011, we have continuously been investing. And what we have seen in the recent quarters is that we are growing, going from strength to strength, I would say, thanks to the Protective Services offering. So we're winning quite a lot with our solutions capability, but we have also seen in recent quarters that some of the guarding customers that we have lost previously are starting to come back as well, because they appreciate they know now what they lost when they discontinued services with Kiritas and a number of those are also coming back. So I would say that we are, we are really winning with good momentum, thanks to the great work that our Spanish team is doing. Sorry, guys, make a quick follow-up. In terms of who that you're gaining share back from, is this coming from are the key larger players across the gear, etcetera? Or is it coming from maybe sort of the smaller mom and pop shops that were very aggressive on pricing to keep keeping business during the downturn that you're now winning stuff back. I was trying to differentiate between between who's who's losing here to the bigger guys or the smaller guys. It's a bit difficult to generalize. I think we are generally winning in the markets, but like you say, I mean, there were a few companies that have also gone out of in the last couple of years because they were too aggressive and not responsible in terms of how they managed their income statement or importantly, their people. And that obviously then probably helps as well. It's a little bit generally speaking, more healthy situation in the market overall. But it's we cannot really say that we are winning more from one specific category of competitors. Thank And there are no further questions at this time. Please go ahead speakers. Okay. In that case, on behalf of Bart and myself, we are happy about the first quarter. Our team is doing a tremendous job across all the different segments and the different countries. So thanks a lot to all of you for dialing in today and good questions. Bye bye.