Earnings Call: H1 2021

Aug 25, 2021

Dear ladies and gentlemen, we would like to welcome you to Centurion Holdings AG's conference call on the results of the half year 2021. Vincent Heron, Martin Walsh, CEO Matthias Kalner, CFO and myself from the Aereus Direct Investor Relations at present. The first is your presentation followed by a question and answer session. Please note that this event will be recorded. Currently, all participants are set to mute. Please keep yourself muted and turn off your camera to support language. Before the question and answer session, we will present how questions can be registered. The presentation can, of course, be viewed online during the call via the Go's convenient access. Alternatively, in case you only dial in by audio, the presentation can be accessed at Sencion's Investor Relations website under Reports and Publications. With this, I hand over to Marc Van Bauschisch. So thank you, Andrea, and also a warm welcome from my side So these earnings calls this morning, and thank you for your attending and for your interest in Zealand. You hopefully see the slides, It's the shared slide. Otherwise, you have also them on the on our Investor Relations slide on the Internet. I start with a short business review Before I hand over to the to Mattias Danfel for the financial details. So as we are looking back for the first half of the year 2021, this was Again, an extraordinary time. It was different than 2020, but it was still extraordinary. Beside all ongoing corona restrictions, We have faced a very strong recovery as demand decreased successfully across all markets. But in parallel, We had a very, very strange and challenging supply chain situation, and the supply chain situation to remain also accelerated in the upcoming months. And it was not just for the wafer supply, but it was also for any other materials. And I'd like to start here probably offering an extraordinary way with big banks with all our employees in that With respect, because at the end of the day, all the financial data we can present today, and they are pretty good, is actually based on the great efforts All our employees had done in these very strange and challenging times. So a great thanks to all the employees. If we come to the business, a short review. First of all, we have our core business. That means all we are doing In normal times, excluding the additional claims from the COVID-nineteen ventilator business, so we are in these core businesses, we recorded very strong growth of more than 35%. This was driven by 2 different parallel aspects. On one hand side, our Established products like gas flow and humidity sensors, they have recorded a Significant post pandemic recovery. On the other hand, we have numerous number of successful ramp ups with new products. So CO2 had also formerly high particulate matters, and they also contributed significant to the growth rate. In the COVID related and extra business with medical ventilator sensors, we have seen a decrease as expected, But we have still a contribution of CHF17 1,000,000 to the revenues this year. As communicated in March already, we assume that this Beyond the normal business, we were able to further strengthen our technological base through targeted acquisitions. In line with our long term growth strategy, which was in detail presented in March on our Capital Markets Day. Finally, before I come to the financials, I would like to say a few words about the current allocation situation in the semiconductor industry. As I have already mentioned at the very beginning, the situation is and remains very difficult and is not limited to wafer and semiconductor related products, but also affects other material groups such as chemical adhesives or compounds. We do not foresee any relaxations in these regards in the coming months. However, we are proud that despite these tense situations, We can continue to offer reasonable, not the normal one, but reasonable delivery time to our customers and provide our customers with added value compared to certain competitors. Some words about the financials. The favorable conditions in this half year is also reflected in the financial figures. We closed the half year with a strong growth. All in all, so including the Extra business with a growth rate of 20% to CHF1.144.3 million. Profitability reached extraordinary 61.9 percent for the gross margin and extraordinary 31 0.8% for the EBITDA margin. The details will be provided later on by our Chief Financial Officer. However, I would like also to emphasize that at this point that this current profitability levels are exceptional and not sustainable. We benefited from strong short term economic tail effects, but also from onetime effects. On the other hand, we are in the process of further strengthening our efforts in R and D and business development in order to be able to address additional at longer term opportunities as we have outlined them in the Capital Market Day in March. However, the necessary increase in personnel has not yet fully impacted in the cost structure to date. For the full year 2021, we Confirm the revised and raised guidance as communicated in July, and I will comment it further at the very end of this short presentation. Now on Slides number 4 to 8, I would like to shortly review the business market by market. 1st of all, about the automotive. We recorded strong growth of 33% in this market. In contrast to the previous year, This was mainly driven by the Tier 1 Tier 2 sensor component business rather than by Tier 1, which was actually very strong last year. At present, we do not see any reduction in demand as a result of the numerous automotive production closures due to the shortage of raw materials. We therefore assume that part of this demand will be used to build up stocks. This is just an assumption we have. We do not have any hard facts from our customers. In this view, we see a steadily increasing market share as well as an increased penetration rate of our central solution. In the medical market, we are, as already outlined before, we are back in normal business. In the first half of the year, COVID related sales reached CHF17 1,000,000 with special sales. However, the night clock has now been processed, So we do not expect any further special sales in the second half of the year. The normal sustainable business developed flat And Stacy. A completely different picture can be seen in the broadly diversified industrial market. Here turnover increased or exploded by a very strong 68% to CHF 61,900,000. The main drivers here were important customer ramp ups with our environmental solutions, such as CO2, Particulate matter, the PM2.5 and also our new formula health center. In addition, we recently launched And the environmental combo module, which is consisting of 5 parameters in one single housing. This is best suited especially for air purifier applications. And air purifier applications, on the other hand, is highly driven by the post pandemic discussions about aerosol infections. By the way, anyway, the pandemic has greatly increased sensitivity to good indirect quality is actually not just a driver for air purifiers, but we see also a triggered demand for CO2 sensors, Not just limited to school room as they are typically we have the discussions here in Switzerland, also in the newspapers. Last but not least, the consumer market, some words about that. This market, again, to remind U About That is a highly fragmented market. They are not actually main players there. There are a lot of smaller or midsized customers there. Here we see a similar picture as in the industrial market. Also there, the demand for gadgets to monitor indoor air quality, so that means Table based small gadgets to indicate the CO2 level on so on is strongly increased And which also triggered the demand for humidity. I would like now to hand over to the Mathias Brunker for all the details About the financials and his comments about. So please, Matthias. Thank you, Marc. Dear audience, also a welcome from my side. Of course, it's a pleasure for me to report about this good numbers we achieved in Page 1 2021. Here you see again the set of KPIs. Mark has already spent some work on that. It is we are very happy to see that from all perspective of our KPIs, we can see this set in a very good shape From the perspective in terms of the market demand, in terms of profitability and in terms of cash generation. So for us, it's Number wise, very successful period we can report about. For the Sir, I just want to recall that with this first report of H1 2021, we For the first time report, following the accounting standards of Swiss GAAP fair, we have communicated this change early this year In March, but as you might remember, if you look at the profitability numbers, KPIs, especially EBITDA, there is no Significant change following this change in the accounting standard. Looking at the revenue development, we see overall 33% organic growth, when we eliminate the COVID-nineteen impact, which was declining from €21,400,000 down to €17,000,000 during the last 6 months. This is a decline of minus 3.8%. So and also if we look at the contribution that we got from our Newly acquired companies, young companies in a more or less startup phase. This contribution is only marginal with €1,500,000 For 2021, the FX Impact is according to the currency development where our Main portion is in U. S. Dollar and euro. And with a minor impact also from Korean won, we lose here another €4,000,000 So all in all, this ends with an already mentioned €144,400,000,000 of total revenues for the 1st semester. €1,000,000 of total revenues for the 1st semester. With the strong growth on the top line, of course, the result is A much better gross profitability. Gross margin is jumping up to €61,900,000. €9,000,000 So the driver here is that we now see a much better capacity load On our operations facilities, this is valid for all the 3 production sites that are up and running, Switzerland, China and Korea. And so we look forward that we can have the opening of our New production site in Hungary quite soon that will give some relief, especially on the operations organization in Switzerland and to take out a lot of pressure here and also, of course, to support the further growth. Looking at the overhead situation, the Development is quite smooth. So also here, we get out some economy of scale by not increasing our overhead costs Linear with the growth on the top line, of course, we would have liked to engage and to empower our R and D resources It's much faster, as Mark already mentioned. So but the job market is Dried out, so it's very difficult to find good talent for us, but we do our best. So for R and D And SG and A, the increase of the cost is mainly driven by the overhead cost of the new acquired companies And of course, by initial costs that are coming up with the start up period for our production site in Hungary. As a result of this variable and fixed cost Deducted from the top line revenue, we see this already mentioned impressive 31.8 percent EBITDA margin In absolute numbers close to CHF 46,000,000. On the bottom half of this page, it is illustrated With the waterfall chart, what is the driver? For this, as mentioned, it is mainly the increase in the gross profit by more or less stable overhead cost and depreciation. I look top down at the income statement, Especially below the operating profit, net finance result is driven by unrealized, realized gains on FX And especially the income tax, which is here, if you calculate it down in a lower 10th percentage, This is mainly influenced by all the initiatives we took with the Swiss Tax revision stopped 'seventeen where we can get quite a good benefit out of that. And we, of course, Calculate with all these elements, focused on R and D expenditures, the Patent Box model, all that is possible. So also for midterm, we can calculate with a tax rate for the group. Of course, if there are no Structural changes of the group structure, then we can also, for the future, calculate with a tax percentage rate in the lower 10. Look at net working capital. The inventory has only marginally increased in 2021. This is not what's not our ambition. We even would have liked to build up some buffer stocks due to the harsh Situation in the supply chain, but driving here the net working capital up to €56,000,000 Compared to the SEK46 billion as per end of year 2020, it is just the Trade receivables at the end of June, which amounts up to €36,000,000 But looking at the receivable situation, we see absolutely no additional risk on our debtors management. ESO remained stable with around 45 days. Talking about CapEx, we see this Very stable compared to the previous periods. Also here to recall all the invest that is done in Hungary, Especially about building, this is a build to suit project. Here we don't Spend money in concrete. We have a long term lease contract for that facilities there. About the statement of cash flows Here, according to the Swiss accounting standards, we can report €39 €1,000,000 operating cash flow and accounting standards asked us to report some proceeds of €30,000,000 of financial assets that we had deposited over the year end 2020, So to make it more readable and suitable for your calculation model that you might have We just transferred this €30,000,000 down to cash and cash equivalents, as you see in the left column Of the numbers and really show a cash flow of investments of CHF 19,500,000 Cash out, which represents definitely the spending for CapEx and the spending for our M and A activities, the 2 companies We have acquired Iosleep and QMicro, a Dutch company. So again, here shown free cash flow development, just visualize €33,000,000 free cash flow before merger and acquisition activities, and This, of course, gives us a quite well headroom in terms of available cash also for future activities and Underlines also with 71.9 percent very good cash conversion rate. A look on our financial position at 30th June, the balance sheet, also here according to Swiss GAP standards, of course, is dominated by the Strong cash position, which is more or less 40% of our total balance volume. All the other positions, No disruptive changes compared to the previous statement from end of December 2020. And this, of course, gives us, as said, a strong position for operations and investments for the future. So with that, I'll close with my remarks and hand back to Marc. Thank you, Matthias. I would like now to shortly summarize the achievements on strategic level in the last 6 months before closing the presentation with some comments on the guidance. As we have outlined in the Capital Markets Day in March this year, Our growth strategy is actually based on 4 pillars. And I'd like today just to focus on the achievements of the last six Not to comment against the growth pillars individually. So the basis of our growth and also our innovative trends This remains our corporate culture. So that's the fundamental. And also the basis is our all the employees worldwide. And if I think this is Extremely important, especially in extraordinary times. I have already mentioned that at the beginning. In these times, in the last 6 months, it was more than Important that all our people, they spend an extra mile either to organize more arrangements than our suppliers could actually deliver Or to find good ways in order to make the shipments to our customers ready in time and not delayed. So I think this is also what reflects in the strength of the financial figures we have seen today. We're also very proud that we have once again been awarded While the world is a very well known organization, right place to work as one of the best companies or employees employers in Switzerland. And this is also a clear commitment for our Executive Board and our Board of Directors to continue this way to take care of our culture. In Focus Area 1, we were able to offer our customers an additional unique selling point through a favorable delivery time, which is not standard now in the market. And we could also gain some market share in certain areas, thanks to this delivery reliability. In addition, we launched the 4th generation of humidity sensors to underline our clear technology leadership. And last but not least, recent weeks ago, we have reached the €1,000,000,000 mark that we have shipped since the foundation of the company 20 years ago. In both of Area 2, we successfully launched Various new products, I have already mentioned them before. For example, this unit chloride CO2 sensor, which is significantly smaller compared to what is already existing on the market. And we have also launched our first formal lab center. The environmental area, excluding humidity, is now already generating 0.25 percent of sales with a clear rising trend. As our 3rd strategic focus, we intend to develop or acquire technologies or Technological pieces for further long term growth. Looking back, successful technology acquisitions In recent years, have often been the starting point or an acceleration point at least for successful internal product development. For example, formaldehyde or our PM2.5 sensor was recently was actually kicked off by an acquisition of technology for also our Tier 1 and Automotive business. As part of the strategic goal, we could close 2 additional strategic acquisitions. On the one hand, the Dutch company, Pure Micro, The founder managed company has developed and produces compact and highly efficient micro gas analyzers for the ongoing analysis of the composition of gas mixture. For applications or sophisticated applications in environmental monitoring as well in the natural gas market, These are applications we cannot address with the send offs we have in our portfolio. So it's a very good extension of the portfolio we have anyways in the company. On the other hand, we completed the full acquisition of the Swiss company IR Suites. They are anyway located in the same area as we already own Sensus after having been a minority shareholder for several years. This company develops, manufactures and supplies mid infrared optical spectroscopy solutions. Although this is on the higher level of performance, but is a good extension for the portfolio we have within Infinera. These are some remarks about the strategy. Now I close with the outlook. We can overall, we can actually confirm the rates Guidance as we have communicated in July 2021. However, I'd like also to point out here that the outlook Still now, we are end of August, but still now, the outlook for the 2021 financial year remains volatile and difficult to assess Because of the unclear course of the global corona pandemic and the allocation situation, we continue to face unexpected plant closures Due to COVID, not here in Switzerland or in Europe, but in Asia, either on customers but also on supplier side, which may affect the supply chain or the ability to shift to our customers. In addition, it is currently unclear how long the challenging situation in the supply chain Last, and this also triggers some inventory effects, which might stop or being even increased Again, so the supply or the allocation situation is one of the big unclear situations for assessing the full year 2021. Coming to the peers, we expect a significant growth rate of 32% up to 43% in our core business. Again, core business means that defined as excluding the onetime bank related business. If we calculate them in, We expect a revenue increase by 3% to 10% due to the fact that the COVID related business is going down significantly to 70,000,000 This is downwards to EUR17 1,000,000 as we have already recorded in the first half of the year. The gross margin is expected to lie in the high 50s What is exceptional, as already commented, and above average. On EBITDA level, we expect the profitability in the mid to high 10s. Both profitability levels are exceptional and driven by the strong economies of scale effects and some onetime effects this year. And again, I like also to point out here that thanks to the promising business opportunities in mid- and long term, We and a very pretty fully loaded R and D pipeline, we are working on intensifying our R and D and business efforts, but they are not affecting the cost structure this year fully. These are my comments about the guidance of 2021. And so we come to the end of this short presentation, I will commence and we are open for questions from your side and I give back to Andreas. Thank you, Mark. We now come to the Q and A session. After which the handout, I think, to you will turn please. Please wait a second to wait until the moderator asks you to speak. I'll also unmute you at that moment. When it's your turn, please turn on your camera, state your name and affiliation and the minimum and please ask your questions. Afterwards, please turn off your camera again Huweng, we will meet with you and go with your hands. Thank you very much. Varun, please go ahead. Yes. Hi, good morning. Can you hear me? Yes, we do. Perfect. Thanks for letting me ask. I have a couple of questions. Firstly, on your comments around inventory levels, you referred to that in your press release. What do you see in terms of your channel and inventory levels at your customers? How do you see the inventory levels at the moment? Also, what is your order backlog and the duration of your backlog? So that is my first question. And second question on your guidance. So your full year guidance essentially implies a flattish sales development half on half, If we exclude the one time COVID-nineteen effect, is that because you're constrained by you're supply constrained or Is there any other factor that we should consider here? And then on your EBITDA margin for the second half, you help us understand the bridge between the first half and second half EBITDA margin? You reported 32% in the first half. Your full year guidance implies somewhere around 25% EBITDA margin in the second half. So can you help us understand what are the factors driving the reduction? I mean, clearly, there were some one time effects in the first half, but You would just like to understand what are the different moving pieces? Okay. I'm not fully sure whether I have Scott, your second part of the question that I saw is the first one about the order backlog and about inventory levels. So order backlog is actually not Really promising or reliable indication or KPI for Cederion because typically, especially in automotive, you have Rolling orders. So they can also be shifted. They can pushed out. They can At the moment, it's hard, but they can actually pull in. And so the backlog typically we experienced in the last couple of years, The backlog is actually a pretty bad indication for the upcoming business for the next couple of months. What we do, and this is actually the base of the guidance we can share with you, is actually we have a kind of a best estimate forecast, which is based on a lot of We have with our customers. So we asked them about their demand for the next upcoming months. Actually, now it's more important because we have to organize the Supply Chain. And based on these indications, we actually built up, opened up a kind of a best SV IV cup, which is based for the guidance. But backlog is the wrong case here for us. And about the inventory levels, for instance, we have no indication from our customers, and it's even harder at the moment About their inventory levels because at the moment, you have it's the same as we do with our supply chain. When we are in hard discussions with our suppliers To get enough raw materials, we would never disclose on which level of interest rates we are, especially if we have some Because otherwise, it's very likely that you will be reduced in allocation because all the suppliers are at the limit Of what they can actually produce and ship. So this is an indication we don't we typically we do not get from our customers. What I can say is that, up to and I'm really proud of that, that up to now, we could actually serve all our customers In a very agreed version, so there were definitely that moment we had also to shift out some limited shipments, But all in accordance with our customers that they are fine to get the material 1 week or 2 weeks later than expected, But we have no hard discussions with the customers if it comes to some delays. So we are already there in a very good situation, but it's hard work every day. Now about the second question. Probably my colleagues tend to support me shortly. Okay. Yes. So Lars, that's the comparison of H2 to H1. I think more or less, we At the moment, we expect that the second half will be pretty similar to the first one, limited to the core business, definitely. So no without the extra business Of ventilators. And if we calculate it shortly that we so we have generated 100 and €30,000,000 in the core business roughly spoken and this doubled, we end actually with €260,000,000 And additionally, the 2017 is the game for the first half. We did extra business, then we went up with 260,000,000 up to 280,000,000. The only risk we have still in the systems are, as I have outlined before, the supply chain and the situation and this extra demand, which is Driven by inventory buildup, assuming we do not know how long that would last. So I experienced, for example, in 20 The very same situation that we have a very strong demand in the first half of the year, and then it's changed. So it can change pretty quickly. We have no indications at the moment that it will change now, but there is some uncertainty in the system. In EBITDA, I think more or less we are a company, we have a pretty large portion of Fixed costs and non variable costs, that means typically our EBITDA is highly influenced by the top line. So whenever the top line is stable, you can roughly spoken also expect that the EBITDA level is on the very same level. The only what is affecting more and more is our efforts to intensify R and D. So we are in the process. We have a lot of In positions, we are in the process of hiring more people to address all what we are we have in our mind to address in future. And these people are coming in more and more, and they will affect or will increase the cost structure step by step. So that's the reason why we expect to fly. Even with the same lines same level of top line, we expect a reduced at EBITDA level in the second half of the year. All in all, we indicated in the highest ranked for the whole year. Thank you, Mark. Just to clarify, so the second half, the flattish sales guidance for the second half is more a function of your demand visibility Rather than supply constraints? I think it's influenced by both constraints by concerns, supply chain concern, but Also, the demand, which is definitely the demand at the moment is not sustainable. So especially in automotive, as I have outlined before, there are some plants Closure, COVID related or supply chain related, on the other hand, we see a strong demand for our products. And I don't think that all these are already So I think we have our own customer side but also on supplier side at the moment. Mr. Henaoer, please go ahead. Yes. Thanks very much, Andre. Good morning, everyone. I have also a couple of questions. So the guidance topic, I think, was discussed. Maybe Just to clarify here on the guidance, so 260 is more of a, let's say, base case scenario and 280 would be Kind of a best case scenario or is your, let's say, best case scenario would be even higher than that? Just maybe on the guidance. And also when you I mean, I think it's very difficult now for most of us to assume the financial estimates Going forward because it's such an exceptional year now in 2021. So I was just wondering, when we look Try to look into 2022 now without any figures. But I mean, do you think that there is really a that there will be a hit On demand in general? Or do you think there are kind of things certain things have changed that will keep demand Hi. Also throughout 2020, for example, CO2 sensors as an example, I mean, I would assume that this has Just started. I mean, it's minor. It's a topic, but still minor at the moment, and I think this can be much higher. So I was just wondering if you give it Can you give a bit of an outlook in general going forward? And maybe as a last question, mean, when I look at your midterm targets, particularly on the R and D spending, 22% to 24% of the revenues, When we look at revenue growth that you have seen now in 2021, assuming your 10% to 15% going forward, I mean, that will end up to be a pretty high number, absolute number in R and D 2022 to 2024. Is this really a realistic assumption also for the real longer term? Or will it fade at some point in time? Because I fail to understand how can you get all these people? How can you have so many projects? Or is that just me as being a not technology guy? Yes, that will be maybe just one sorry, One last very last one before I have to do a follow-up then. And maybe on the M and A, I mean, you have now over $100,000,000 net cash. Are you also looking at some larger things potentially? Or will it remain in the area that you are doing right now, smaller This is as we've seen in our 2 projects. Well, so thank you, Vincent. So first of all, about the guidance, 260,000,000 up to 200 We do not differ between a best case and a worst case scenario. So we'd like actually just to give you comfort as much as we have comfort about the ongoing next month. So all in all, I think we try actually to define the range in a way that there's a highly likelihood to be At the end of the day end of the year to be within this range. And definitely, EUR260,000,000 is Worst scenario than in 2018. That's more than obvious. But I think more or less, I think if the business is going as we are used To have it the last couple of months, I think then it's very realistic to have 270 or slightly more than that or Even in a very good scenario, 280, but it might also change, and we do not know it. And then The changes are pretty fast. So I'm coming back to the question of Varun before with the backlog. So then if there are any changes in the market, Then typically, our customers, especially not the most if they are immediately starting to push out orders, and this affects top line very fast. This is actually the reason why we are still uncertain in a range of €20,000,000 But it's not a fact and that is the worst case or a case of If there is one project particularly not, then it's the best case, and the other is not as the case. Midterm. And so about 2022, though, I would be very, very happy to have this crystal ball to know more about what's about the demark of next year. So again, my gut feeling is actually that we have on the one hand side, we have definitely made significant progress, and this is definitely sustainable In generating more revenues from other products and humidity and flow owners, so 25% of the revenue is already recorded in all the other environmental fields. And this will definitely continue this way also in a rising track. On the other hand, we have also increased market share in different fields, also in humidity. We have also Additional penetrate or increased penetration rates, although this is highly likely to continue that way. But the increase We have recorded this year. It's definitely also that's my thought feeling also driven by some times of concerns of our customers not to get enough raw materials. So we call that in German, that in a way that the people like actually to get whatever They like to get whatever they can get. And this effect, I call officially the inventory buildup effect. I think this will definitely come to an end, but I don't know when. So I think there will be a kind of relaxation to which extent It's just speculation. I don't know. And I can also just not I have no indication when we are coming to Good point. I'm in very intense discussions and exchanges with our foundries. They have definitely more market intelligence on semicons than I have, but also they have no indication how long this situation will last. About the R and D of 22% to 20 4%. We are we have guided mid term. Definitely, I can give you Good comfort that we have definitely a lot of ideas. We can also expect 22% to 24% of R and D In an efficient way, definitely, and an optimized way. No, I think, certainly, our commitment, as we have outlined in the Capital Market Day, is To go our way, the success rate of last 20 years, to drive innovation, to also to address new aspects, If we are looking back, we have invested a lot of money in the last year into PM2.5 formulae And so on or CO2, but these are exactly the product lines. They are now contributing significantly revenue. So at the end of the day, it's just a crash of time where we cannot transfer R and D efforts to additional top line contribution. And in these We expect we like also to continue that way. But on the other hand, definitely, there is some bandwidth limitations In hiring good people because at the end of the day, we do not like actually to hire some people. We like actually to hire the best talent because just they are able to drive this innovation and this takes time. So coming looking forward to 2022, we have this jump now of the revenues. So there will be we need some time to increase R and D to the level we like actually to feel comfortable also to address all these opportunities, And this will also affect the 2022 results. This reflects in a payable situation because we are not yet On the level of 22% to 24% next year. On the other hand, I'd like also to keep in mind that We are not fully unclear at the moment about the continuation and the development of the top line. And again, our company is now benefiting from the fact that we have low portion of variable costs. If next year might And in a less favorable situation of top line and we do not know, then we have automatically the opposite Impact on the EBITDA level. So at the moment, it's just too early to give any indications about that. But at least, I think that can give you comfort that we have good ideas also to increase R and D in an efficient way. And about acquisitions, you're right, we have a lot of cash. I think that's also a great opportunity that we can react Pretty fastly. There are also some acquisition targets in the pipeline we are looking into, not yet nothing is actually decided yet. So they are smaller or larger. But typically, we feel comfortable to focus on this is not limited to that, but this is actually our 3rd priority is to identifying acquisition targets. They are they have great technology, but they are not yet Fully established in the market, because whenever you have already the revenues, you just pay them At the end of the day, if we can acquire technologies and we can bring in our expertise in transforming promising technologies 2, reliable and mass products, and this is exactly where we are strong in, then I think we have the best Efficiency of spending money because we spend just the money for technologies, but not already for the established revenues later on. And this is exactly where we can actually bring in our expertise. So therefore, this is actually the focus we have, but it's not limited to that. Yes, makes a lot of sense. Thank you very much. Can I just have one add on question? Sorry, I don't want to steal, of course, anybody's time. But You were talking about 25% is already now environmental centers. So there I assume there was a Pretty high growth rates there as well. I was just wondering there, is it can you break it down to certain regions? Is it a Bigger topic in Asia, for example, now? Or is it more in Europe? Or what are actually The drivers here behind that, I mean, it's clear what are the environmental drivers in general, but now that you are already at 25% and a lot Your new exactly new environmental products are so successful, what are the real where are the real drivers coming from? Well, I think it's pretty global. On the one hand side, one of the contributors were definitely some global accounts. They have just started their product. Our products are designed in, and they are anyway global. So I can also disclose one of the companies because it's anyway on the market. So We are one of the premium suppliers for an air purifier of Dyson. And Dyson, at the end of the day, is actually European companies. They are manufacturing in Asia, and at the end They are selling worldwide. On the other hand, what we see is actually that CO2 is especially a topic in the Western part of the world, that means Europe and U. S. And California, for example, talking about CO2 monitoring for cool rooms, we have the same discussions here in Europe. On the other hand, Formaldehyde and particulate matter is actually more focused in Asia, but it's not limited to these regions, but it's probably there are some focus with these respective product lines. Thank you very much for that. Thank you, Michael. Are there further questions? That doesn't seem to be the case. With this, we would like to thank you very much You should join in today's earnings call, and we wish you all a good day on behalf of Centurion. Thank you, and goodbye. Thank you.