Earnings Call: Q4 2019

Feb 11, 2020

Ladies and gentlemen, welcome to the AMS Full Year and 4th Quarter 2019 Results Conference Call. I'm Alice, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. At this time, it's my pleasure to hand over to Mr. Alexander Eberke, CEO Mr. Michael Vaksel Marcovich, CFO and Mr. Moritz Reiner, Head of Investor Relations. Please go ahead, gentlemen. Good morning, ladies and gentlemen. This is Moritz Reiner. I'm very happy to welcome you to our Q4 and full year 2019 results conference call. Please note that there is a presentation available to accompany this call on our website atams.com in the Investors section at Presentations and Audio. Afterwards, in the Q and A, we would ask you to kindly limit your questions to questions each. With this, I would like to hand over to Alex and Michael to give you an overview of the development of our business. Yes, thank you, Maury. Good morning, ladies and gentlemen. I'm very happy to welcome you to our Q4 and full year 2019 conference call this morning. I will discuss I will first discuss our business, including the acquisition of Osram, starting with key financial figures. Following that, Mike will comment on the financials in more detail, including further topics related to the acquisition. Our full year 2019 revenues grew 32 percent to $2,086,000,000 4th quarter revenues came in at $655,000,000 above our guidance range and up 38% year on year. Our adjusted EBIT for the full year 2019 was 21% of revenues or $433,000,000 compared to 9% of revenues for 2018. Adjusted EBIT for the 4th quarter was $184,000,000 or 28 percent of revenues, which was fully in line with our expectations. As you can see, our business showed a very good performance in 2019 and ongoing positive development in the 4th quarter with very strong results. Looking at last year as a whole, we saw strong demand for our consumer solutions, which allowed us to achieve these excellent results despite a rather muted situation in our nonconsumer end markets. Before I discuss our business in detail, I would like to comment on the acquisition of Osram, Sergey or Osram. Let me briefly recap the rationale of the acquisition, which is a transformational step for AMS. The details on Page 7 of the presentation, we see a clear and compelling strategic rationale for the acquisition of Versant to create a global leader in sensor solutions and photonics. The acquisition accelerates AMS opportunities to win a new breakthrough optical solutions. We will expedite the diversification of our revenue mix, targeting a significantly balanced and market exposure in the midterm. We're able to enhance our manufacturing footprint with scale and cost advantages and leverage our complementary go to market strength. And lastly, I'm confident with the combination to deliver significant synergies visible in next years and longer term. Looking at Page 8, this is a highly complementary combination of AMS and AUSAN that we bring together. 2 leaders in optical technologies, which jointly will be able to offer market leading coverage of light emitting technologies, light sensing, optics as well as related hardware, software and algorithm. This will create a compelling technology platform with unmatched coverage of the optical technology value chain and a stronger combined company to benefit all stakeholders. As shown on Page 9, combining Ostrand with AMS is an aggressive step forward where we are addressing disruptive megatrends with around €5,000,000,000 of revenues and delivering value to customers. And we see a combination of balanced and market exposure plus profitable growth, which is supported by a sustainable capital structure, including fast deleveraging of the balance sheet. Based on this, we were successful with our all cash tender offer for Oksham in early December 2019 at €41 per share. In October 2019, we've already become the largest shareholder of OSAM with a shareholding of almost 20%, and on that basis launched a successful tender offer in November 2019. To refinance part of the acquisition financing, an extraordinary general meeting of AMS was held on January 24 this year, in which a capital increase in form of rights issue of up to €1,649,000,000 was approved by our shareholders. We are in the process of obtaining required merger control clearance for the transaction and currently expect the transaction to close in the Q2 2020 subject to set of these required clearances. In addition, we have announced yesterday the firm intention to pursue the termination and profit and loss transfer agreement with Osram in order to accelerate the implementation of the company's joint strategic vision. We are taking this effort on the basis of strong shareholder support for the acquisition as it will enable both companies to optimally work together and expedite the realization of synergies for AMS shareholders. Let me now discuss the development of our business. Our consumer business is a global leader in advanced sensor solutions for smartphones and consumer devices and was again a key growth driver for last year. It also provided the largest contribution to the results of the 4th quarter. I'm now looking at Page 10 of the presentation available for this call. We are a leader in 3 d sensing technology where our core portfolio and expertise supports all applications and approaches, structured light, time of flight and active stereo vision. For both front and rear facing consumer 3 d. Our high power vessels, leading optics expertise and unequaled hard and software portfolio are what's driving our market and technology position in 3 d. Last year, we shipped very substantial volumes in 3 d solutions and the leading smartphone OEMs globally and clearly expanded our position in the Android market. We currently ship high quality 3 d sensing illumination in core technologies, structured lights, time of flight and active stereo vision, serving different customer needs. Our differentiated VCSEL technology is recognized in the market for excellent performance, which has allowed us to build a very good market position in VCSEL for consumer 3 d sensing. The key development in 2019 was the introduction of world facing ITOS systems in higher smartphones, which drove strong volumes in our VCSEL 3 d illumination for iTOS. This iTOS system enhanced and focused photo camera for better picture quality, a feature that is highly successful with consumers. Based on design wins, we expect a broader customer adoption of these wood facing systems in 2020. Turning to Page 11. We have to introduce ASV 3 gs technology last year, and we are shipping into 1st smartphone implementing our front facing PSV. PSV offers high 3 gs performance, including support for payment security at lower system complexity and total system cost. We expect ASV to gain a significant market position in 3 d applications going forward, and we are getting more positive market feedback on these attractive technology. Here, we leveraged a partnership with image sensor specialist smart brands for near infrared or NIR image sensing with high quantum efficiency, which enables superior optical performance. Recently, we presented first ASV system demo implementation with NIR sensors based on our IP. The systems combine AMS illumination, sensing, software and biometrics into fully integrated AMS 3 d solutions, which demonstrates our increased system capabilities and portfolio in 3 d sensing. Driving a major innovation on the base of ASP and our optics know how, we feel confident to be able to move 1 facing 3 d sensing fully behind the OLED display. That will mean that the 3 d system for face authentication is totally invisible and does not take up any space in the front of the phone. We are making very good progress and now expect to demonstrate the behind OLED ASV full AMS 3 d system within 6 months. This solution combines speech illumination, and IR sensing, software and data written from AMS and based on AMS IP, which highlights our unmatched portfolio for full 3 d system offering. And this 3 d BRIHIND OLED technology will eliminate visible components on the front side and offers the convenience and security of 3 d, we expect it to drive attractive new opportunities in consumer devices. Turning to Page 12. We are leading innovation also via another new technology in 3 d. We expect D2 technology to play an important role going forward as 3 d sensing applications continue to evolve and see OEM interest accelerating for this technology. Detox offers excellent performance across challenging light conditions, particularly bright light and for longer distance of several meters. Detof is therefore a highly attractive technology for new 3 d use cases, but it's technology technically highly demanding. We are moving ahead in development of a high performance full AMS Detox system, which combines AMS illumination, optics, spare sensing, etcetera, into a high value solution we feel very excited about. In Consumer, we see emerging momentum in Industrial, where market interest for Industrial Access 3 d, such as warlocks is growing while we are working with a global OEM for an industrial ASV wind in a household device. Rounding off, we introduced a long distance 1D12 solution for very accurate use of capture last year and have won the first design for laser based autofocus in a high volume smartphone, which is planned to be launched this year. So when I look at the consumer 3 d market, we're able to fully cover evolving customer needs and roadmaps across all technologies, regardless of whether structured light, ITOF, ITOF or ASV is the preferred customer approach. Looking at our momentum in Consumer 3 d, I can say that we are pursuing quite a number of new designs and new opportunities with the largest names in the consumer market. Switching to Automotive 3 d on Page 14. We continued significant R and D for advanced LIDAR, and we are seeing very good VCSEL traction with major automotive players. Next to the large scale 3 d LiDAR illumination program in 2 solid states for ZF, the leading Tier 1 system supplier, we have active engagement in different geographies. For these, we won 2 further LiDAR illumination projects and 2 additional Tier 1 suppliers last year with an expected total lifetime value of several $100,000,000 Our addressable high power VCSEL arrays offer significant advantages in different standing architectures. For several architectures, we provide complete subsystems, including dedicated driver ICs. In Capital Monitoring is evolving into a meaningful new automotive optical field as OEMs and Tier 1 suppliers showed strong interest in differentiated 3 d and 2 d use cases. We have already won a first 3 d time of flight origination project at the Global Tier 1 supplier and at the recent CES trade show showcased a full AML3D solution for fiber recognition using LASV illumination and NIR sensing integrated into the dashboard at a very tiny scale. With other optical sensing, we understood our market leading position in display management last year. Looking at Page 16, we introduced a significant innovation allowing OEMs to move high performance proximity and light sensing invisibly behind the OLED display. This unmatched behind OLED technology saw very strong market success last year as OEMs are keen to pursue maximized tree to body ratio and bezel less phone designs. Adoption expanded quickly, with behind OLED solutions already shipping in a range of high volume Android smartphones and mobile device platforms. With further Design 1, the option to remove laser less elements from the front line is expected to drive further adoption of behind OLED and cross leading OEMs. Looking across technologies, we are shipping an extensive range of high volume display management solutions to the broad base of consumer OEMs. Moving to Page 17. Leveraging spectral sensing, we also introduced an innovation for extremely accurate automatic white balancing in smartphone cameras, which uses lower resolution spectral sensing. Correct white balancing is essential in photography to realize best picture quality and color expression. Our solution enables previously impossible white balancing accuracy through detailed spectrum analysis of the light environment. This in turn creates significantly better picture quality and vivid natural colors for mobile devices. We have won a first design for AWB in a high end smartphone platform, which is planned to be launched this year. We also started shipping new figure detection sensors in high volume to Android OEMs last year that improved picture quality while detecting artificial light flickers. At the same time, we remain engaged with OEMs in optical personal and health sensing where we measure blood pressure and additional data at outstanding accuracy. Let me now look at our AIM or non consumer business. Our Automotive, Industrial and Medical business showed an overall muted performance in 2019, reflecting a difficult automotive and industrial market environment. In the Q4, though, automotive, industrial and medical were able to record a more positive revenue trend. In Automotive, we achieved solid results last year despite a generally weaker demand situation, which resulted in a subdued market environment worldwide. We focus on safety, driver assistance, autonomous driving, position sensing and chassis control, serving a range of Tier 1 suppliers and OEMs, while market traction in automotive continues to increase in Asia, including Japan. Our industrial business performed in line with muted expectations against the tax front of weaker end market demand over the course of 2019. We serve the industrial automation, factory automation, harbor and additional industrial markets as a leading supplier and address market opportunities in sensor rich industrial IoT in Industrial 4.0. Here, new application, including 3 d, create opportunities for the coming years. Referring to Page 18. In Industrial Imaging and Machine Vision, we continue to leverage our industry leading global shutter technology with new designs last year. Growth applications such as 3 d create new optical sensing markets where the SmartSense partnership accelerates AMS solution capabilities. Just recently, we closed the joint venture transaction for our environmental sensing activities, which we had announced in spring 2019. The joint venture, in which we are a minority shareholder, will allow the business to successfully address growth opportunities with the focus on Asia. Our medical business saw significant growth in 2019 despite a generally challenging market economic environment worldwide. We confirmed our leading position in medical imaging for computed tomography, visual x-ray and mammography and continue to expand our business in Asia with several regionally based OEMs. We're also a leader in the next generation optical endoscopy, shipping nanoscopy micro cameras in volume. Turning to Page 19. We recently introduced a major innovation in medical imaging, the first product sensing solution for computer tomography, where previously only fully customized basics were available. Based on monologic integration of sensing analog to digital conversion, we offer high performance imaging and significantly lower system cost and complexity, while doctors and patients benefit from better diagnostics and lower valuation doses. In operations, we significantly redesigned and improved manufacturing processes in Singapore in 2019. Production efficiency and deals increased strongly as we require lower levels of labor and materials compared to the previous setup. This allowed us to record meaningful better profitability for our Singapore manufacturing compared to the year before. We successfully completed the construction of our internal VCSEL production line last year for a rent capacity of around 2,000 206 inches wafer starts per month. Production ramp of the front end facility began as envisaged at the end of last year and is expected to extend through the current year. We are now able to explore differentiation opportunities in higher power VCSEL through both design and manufacturing, while stable, outsourced and internal VCSEL capacity supports our expected growth needs. Let me now come to the outlook for our business. For the Q1 2020, we expect our business to continue to perform well against the backdrop of typically expected seasonality and the more uncertain global macroeconomic and geopolitical situation. We foresee high volume consumer programs to provide important contributions based on supportive smartphone volumes. In nonconsumer end markets, however, business trends remain influenced by the challenging macroeconomic and demand environment. The position of Ostrand is progressing as expected with regulatory approval proceedings underway and the legal basis for implementing the planned right issue in place. Encouraged by the constructive relationship with Ostrand and overwhelming positive feedback on the strategic merits of the transaction, we expect to successfully close the transaction as envisaged. On the basis of available information, we expect 1st quarter revenues of $480,000,000 to $520,000,000 showing a less pronounced level of seasonality and a strong year on year increase of 28% at the midpoint. The adjusted operating margin for the Q1 is expected to be 19% to 21%, reflecting ongoing operational efficiencies and showing a very significant improvement year on year. Looking forward and based on current information, we also expect another year of revenue growth for 2020. When compared to historical figures, the revenue expectations above excludes deconsolidated revenues related to the mentioned divestment and joint ventures of around $20,000,000 to $25,000,000 a quarter, which have been deconsolidated as of the end year end 2019. However, all expectations mentioned before are based on the assumption that the consequences of the coronavirus infections will not have a meaningful negative impact on our business for the Q1 of the year 2020. Let me now hand over to Michael for a detailed look at our financial results and further comments on the ongoing acquisition process. Thank you, Alex. Good morning, ladies and gentlemen. A very warm welcome also from my side. It's my pleasure to give you an overview of our IFRS and adjusted record Q4 and full year results of 2019, followed by an update of the acquisition process of Osram. Let me start with our P and L and the top line development on Page 27. Our revenues came in very strong at 2.085 €9,000,000,000 a 30 2% increase last year over 2018. Also, 4th quarter, we recorded a top top line development 38% growth to €655,300,000 in revenues. Significant growth in full year last year and Q4 once more was predominantly driven by our Consumer business. We also seen a continuing revenue diversification with expanding business in the Android market. On the next page, Page 28, our revenue distribution. We've seen a change in the regional split, which is mostly due to consumer side changes in our billing structures. The increased revenues by market in 2019 was driven by a broader development of contenting products in our consumer business. We now have more than 80% of our business in consumer and less than 20% in non consumer. On the next page, Page 39, you see our backlog development. I may remind you that the figures are not fully comparable due to a narrower backlog definition from 2019 onwards. Still, we can see that year end 2019 had an expanding role of inter quarter business, particularly in consumer and typical seasonality. With that, our total backlog is 265.1 1,000,000 at the end of last year. Let me now go to our gross profit and gross margin development on Page 30. We have seen a very strong 71% increase for last year to €853,000,000 in absolute terms and in relative terms, an increase to almost 41% gross margin. For the Q4, we also recorded a strong increase over Q4 2018 to €296,000,000 45 percent 5.2 percent gross margin. The gross profit margin development reflects major improvements in production efficiency, higher utilization and positive product mix effects. On an IFRS level, our gross profit margin in 2019 was 38.7 percent in Q4, 43.2%. Further down the P and L, our R and D expenses also showed a very nice development. We've seen a higher R and D investment continuing throughout 2019 for major development projects in consumer and also non consumer business. In relative terms, we've seen a substantial decrease 2019 in R and D spending in line with targeted development. Our R and D spending therefore was €289,000,000 last year or 13.9 percent of revenues. In Q4, we recorded €64,100,000 R and D spending or 9.8% of revenues. Question A expenses also developed positively. We've seen an increase in absolute terms to €193,600,000 in 2019 or 9.3 percent of revenues. In Q4, we recorded €51,300,000 I'm sorry, dollars and 7.8 percent of revenues. The decrease in relative SG and A spending shows the strong cost discipline and the ability to manage our profitable growth. All in all, this led to a very positive result from operations or EBIT, and we recorded a record level of 400 and $33,400,000 in 2019 or 20.8 percent of revenues, a strong increase of more than 200% compared to 2018. Also for the Q4, we've seen a strong increase from $60,000,000 in Q4 2018 to $184,300,000 in 20.19, which is 28.1% of revenues. The EBIT reflects the strongly improved gross profitability and production efficiency improvements. IFRS, our EBIT was $363,700,000 or 17.4 percent of revenues and in Q4, dollars 200,900,000 or 30.7 percent of revenues respectively. If we move on to the net financial result on Page 34, that was clearly driven by valuation effects of our U. S. Dollar convertible bonds in 2018, which is a base effect of high result, financial result. In 2019, we have seen more development more in line with what we have expected. We've seen first financial cost impacts in conjunction with the Vosram offer and shareholding, especially in the Q4, which led to 28 point $3,000,000 negative financial result. In total for 2019, we recorded $14,300,000 negative net financial result. Our tax expenses on the next page also showed a very positive development. Attractive tax rate going forward also comfortably in line with what we have expected. I may remind you that we always said we expect the tax range in high single digit numbers, which is exactly what you see in Q4 with 7.8 percent or $13,500,000 Net income, therefore, in 2019 reflects the operating profitability, very strong CHF4.15 or CHF4.05, basic and diluted on an adjusted level, at CHF4.13 or 4.03 dollars Our reported basic and diluted EPS, therefore, in Q4 was strong CHF1.94 or CHF1.77 or CHF1.96 and US1.78 dollars respectively. Now let me move on with some more numbers on the balance sheet. On Page 38, you see our working capital development. We had a very tight working capital management in the light of very strong business growth we have seen last year. Our trade receivables came in with CHF223,400,000 at the end of the year compared to CHF 133,900,000 at the end of 2018. Our inventories decreased slightly to 232,500,000 in 2019, reflecting the strong operational performance, especially in our manufacturing areas in Singapore, a decrease to €342,900,000 in 2018. Our trade liabilities also decreased to $149,900,000 compared to $194,600,000 at the end of 2018. Main reason for that is lower CapEx development and therefore, lower trade liabilities. Overall, our working capital increased only slightly from $282,200,000 end of 2018 to $306,000,000 end of 2019, which is a 15% number as percentage of revenues compared to 18% in 2018, very nice improvement. On next page, Page 39, you see our debt and cash and short term investments development. We've seen an increase of 32% to 1 $750,000,000 at the end of last year. Equity ratio on the basis of the strong result also increased from 36% to 38%. And our cash and short term investments decreased from €691,000,000 at the end of 2018 to 5 50 $3,700,000 at the end of 2019. Clearly, this net debt increase is largely driven by the financing of 20 percent Osram Holding in connection with our offer. On a standalone basis, however, our number our net debt to EBITDA number showed a very strong decrease as expected from more than 5% end of 2018 to very attractive 1.3% at the end of 2019. Now let me move on to the cash flow to complete the picture. On Page 41, you see we have had a very strong cash flow in fiscal 2019, which reflects the operational performance and clearly underscores our cash generating ability. We've seen a strong increase of more than 100 percent to $717,000,000 or 34.4 percent of revenues last year. In Q4, we've also seen a very good performance, euros 276,000,000 operating cash flow, 42.2 percent of revenues. Last but not least, on Page 42, we come to the CapEx of our business. As we have expected, we've seen a very substantial reduction in CapEx as the significant investment cycle of the 2 years 20172018 was completed. Substantial reduction to below 10% of revenues, 9.6% or $200,900,000 last year. Also Q4 shows a significant decrease, 33.6 percent of revenues or sorry, €33,600,000 or 5.1 percent of revenues. We expect our CapEx target to stay below 10% of revenues going forward. Now let me come to some details of the OSRAM transaction. I want to reiterate on Page 43 that this transaction clearly fulfills our M and A criteria. It's strategically compelling, as Alex mentioned before. It's value enhancing. We see significant cost and revenue synergies with an expected annual pretax run rate in the excess of €300,000,000 It's financially accretive. We expect it to be accretive with the earnings per share number from 2021, the 1st full year of consolidation onwards. And also, return of invested capital is expected to exceed the weighted average cost of capital from 2021 onwards. This all this will be financed by a very sustainable capital structure. The pro form a leverage of below 4x 2019 EBITDA at closing and up 3x of 2019 EBITDA, including synergies, and we target to delever the balance sheet to less than 2 by 2021. And last but not least, it fits with AMS Financial Model, the combined business targeted to achieve double digit revenue growth and supporting the AMS medium term adjusted EBIT margin target, which is 25% plus. Let me give you a little bit more detail on the sustainable capital structure as I mentioned before on Page 44. We have a fully committed financing by our banks who have underwritten a €4,400,000,000 bridge facility and a €1,650,000,000 equity issue, which was, as Alex mentioned before, already approved by our shareholders. It will be it will happen in form of a rights issue, and we're working towards that. The planned debt refinancing of up to €2,900,000,000 is also fully committed, and we also work towards that. And as said before, we target to delever our balance sheet to about 2x net debt EBITDA in 2021. Again, to finalize that, the capital raise was approved by our shareholders on January 24 this year, and we are able to implement after finishing the prospectus rights issue from the end of February, and we're working towards that. We expect as applicable on the Austrian law, 2 weeks rights trading period, which is followed by the issuance of detailed terms like subscription price, exchange ratio and value of the rights, which will be defined shortly before the launch. Now let me also add a comment on what you have seen yesterday. In addition, we announced our intention to pursue a DPLTA or domination agreement, as Alex also mentioned before. After further analysis, we believe pursuing a DGLTA is the most advantageous course of action for AMS. This enables us to achieve a speedy and beneficial integration of Osram following the expected regulatory approvals and the closing of the transaction. EPRTA also ensures the timely and complete realization of the synergies we expect from the combination of AMS and Osnab. We have announced the intent now as we are keen to optimize our position and the position of AMS shareholders with regard to the implementation of the DPLTA. One significant parameter related to the eventual valuation of Ostrand, which is part of the DTLTA, is the 3 month trailing volume weighted average price of OSRAM or WeWAP. Based on our announcement yesterday and our internal analysis, we expect this VWAP to be around €42.2 This VBEP price will be looked at by the relevant quarter together with a separate valuation following described methodology. In any case, the approval of such DPLPA would only happen after the closing of the transaction, which we currently expect before summer. With this, I would like to come to the highlights on Page 45 of the presentation, next page. Again, we clearly have a successful strategy with focus on leadership in optical technologies. With transforming the with the OSTARM acquisition to create a global leader in sensor solutions and photonics with an outstanding portfolio. Our key success factors are differentiation, innovation, high performance and solution related capabilities. Our balance sheet shows a solid and sustainable capital structure to support the Osram acquisition, and we're targeting a very good deleveraging over the next couple of years. We've seen a very good operating profitability and also expect this going forward with a strong cash flow generation and limited CapEx requirements. Siemens and Osram are in an excellent position for long term growth opportunities in exciting areas. And with that, I would like to open the floor for questions. Thank you for your attention. The first question comes from the line of Achal Sultania of Credit Suisse. Please go ahead. Yes, hi. Good morning, everyone. Just a couple of questions. First on the under the glass ASV technology that you're talking about, Alex. I thought that basically a lot of Android vendors have already given up on Face ID. And here you're basically saying that you are still working towards implementing technology under the glass. So can you just help us understand what are the discussions that you're having with the customers around the Fintech technology? Can it have a revival after a soft launch last year? And then secondly, on the combined entity AMS plus Ausram, obviously, Ausram's near term guidance is well below what AMS is delivering in terms of growth and margins. Are you saying that the combined EBIT should actually deliver double digit growth at 25% plus EBIT margins over the medium term? Is that the target for the convenience? Thank you. Yes. Alex here. Thanks for the question. Let me just give a short answer your last question. The answer is clearly yes. The double digit growth and more than 25% adjusted EBIT margin is for the combined entity. We are pleased with the last announcement from Austin, but there is obviously a way to go. But this is the return target we want to achieve and we are confident with this. On ASV, you need to understand why some customers went away from this idea, which actually we don't see it as dramatic as you have mentioned it. 1 is cost system complexity and convenience. But with the ASV, which is a lower system cost, which is easier to handle for customers since we can provide a complete system and it's behind OLED. So it's not visible if we see strong momentum going forward in this field. And the other point is, it's also important, which was not there 1 or 2 years ago, ASB is also payment has payment security, which enables all the application you can do with the other technologies. So it's a very new technology, lower complexity, lower system cost for customers, very convenient and invisible for consumers. It's a very different thing. Okay. Thank you, Alex. Your next question comes from the line of Sebastian Stavowicz with Kepler Cheuvreux. Please go ahead. Yes. Hello, everyone, and thanks for taking my question. A good one is getting those firms because a lot of things have changed since you announced your synergy target last summer. Ofram has pushed out somewhat its midterm margin objective. You gave some higher commitment to impairment in Germany specifically. Are you still confident or comfortable with your €300,000,000 synergy target? And the second one would be to understand a little bit the difference in terms of semiconductor content for AMS specifically between the 3 different three d sensing technologies, 3 d device, time of flight or active stereo vision? Is there any major differences for you at this stage? Yes. Thank you for your questions. So related to Osram, actually the people we're looking for the company, the even more confident we are to achieve this number, the synergies or even higher. So we are very motivated and encouraged to accomplish this. On the content for the 3 technologies, it depends a little bit, of course, on the assessment application, but it's time for us. It's kind of comparable. And obviously, when you when we deliver complete solutions, even including software, the content is, of course, extremely effective for us. So we see this very, very positive. Maybe one additional remark on Osborn, the CFO, Osborn also confirms my statement last week. The next question comes from Robert Sandler from Deutsche Bank. Please go ahead. Yes. Hi, good morning. Just on the domination agreement, I know you're anchoring VWAP, 3 month VWAP. But As I understand that this could take quite a while, presumably that VWAP will go up over time. And it does feel like there are a lot of hedge funds that are trying to hold out for numbers more like €50 So is there something about the process that I don't quite understand in terms of the court or some kind of legal process that could anchor you at the recent 3 month revamp as a result of this press release tonight? Because as it looks like today, it's going to be hard to get the approval from the necessary 75% unless you sort of do concessions for these hedge funds that control our shares. So I'd just love to get some idea around the potential risk of the higher than expected fleet outflows. Yes. Good morning, Robert. It's Michael. Actually, it's the other way around. We locked in the WE WAP by announcing the VPLTA for a period of about 6 to 9 months, depending on how the process goes. And since we have the ability to buy in the market, if you want to, we can also increase over time our shareholding to a level where we expect that we get 75% of the votes at the upcoming EGM of Osram. Got it. So you can still buy in the market basically as of today? There's no restrictions? Okay. Thanks a lot. On that, there are some restrictions, but we can do more. Next question comes from the line of Peter Connor, BNP Paribas. Please go ahead. Great. Good morning, gentlemen. Thanks for taking my questions. 2 from my side, if I may. Maybe firstly, Michael, you talked in the release 2020 growth is expected. Can you help us with that if you can give any more color? Just looking at consensus, it seems like it's up 10% year on year for 2020. Is there any type of profile that we should expect? Any color on that would be helpful. And then maybe actually the first second question also, Michael, on the pricing for the capital raise. Do you have when exactly will that be best? Do you have to wait until after the contestation period finishes? And if you can give us some detail around the specifics there for the pricing, that would be helpful. Thank you. Yes, sure. With regard to the outlook, as you know, we continue to give detailed guidance for the upcoming quarter as before to frame expectations on a larger scale. We wanted to ensure the market is not being biased somehow by short term developments like the rights issue, but really taking a little bit longer term view. That's why we said we expect growth here. But obviously, I cannot share any more details than that. And with respect to the rights issue, I said, we expect to be ready with everything needed in the process by end of February, beginning of March, and we take it then from there. The next question comes from the line of Jurgen Wagner, Weinsworth Bank. Please go ahead. Yes, good morning. Thank you for letting me on. Actually, I have two questions. A follow-up to your ASV three d behind us. Actually, last year, you gave us a much longer time frame. And now you say you are already within 6 months. What drove that acceleration in development? And the second question as a follow-up on Osram. Yes, as you announced to enter this DP LTA, What makes you so confident to close the deal actually over summer? Currently, we see like delays at Infineon when they are in the process to buy Cyprus? Thank you. Yes. Thanks for the question. So first of all, within the 6 months, we have to first promote the value for our customer base. But we, as you correctly mentioned, we are ahead of our schedule. We put a lot of investment and strong engineers in big groups on this development and we are developing very, very nicely, much faster than we even expected. And it's a very compelling technology. We have a very differentiated solution there. And you can easily imagine that everything which is behind OLEDs, which is invisible and has the same functionality or better, will be a great appreciation for our customers. On the second question Yes, sure. Good morning, Jurgen. Actually, the reason why we are so confident about the timing is that we don't expect any regulatory issues. We have almost no overlap in businesses in no country. So it should be a very straightforward process. And that's why we expect this closing quite soon to what we have heard from our lawyers. Ladies and gentlemen, if there are no further questions at this point, we would like to thank you very much for joining us this morning for this results conference call. We wish you a pleasant day, and we hope to speak to you again. Thank you very much, and have a good day.