Seco SpA

MIL:IOT

Earnings Call Analysis

SECO experiences tempered growth but maintains strong margins

SECO, after a growth sprint at 43% last year, has experienced a tempered growth rate, yet still achieves a commendable 20% year-on-year growth after adjusting for one-off revenues. Growth has slowed from 28% at the year's start to a slight 1% decrease in the latest quarter, attributed to customers postponing, not cancelling, orders amid economic conditions, with some overdue backlog expected to clear by year-end. Margins remain robust at 49.5%, a 200-basis point increase over last year, buoyed by normalized component costs and business expansion. Operating cash flow reached EUR 14 million, with a forecasted revenue jump over EUR 7 million in the upcoming quarter. SECO's diversified portfolio and value-added services like CLEA and AI position them favorably against mainly Taiwanese competitors. CapEx in Q3 peaked due to investments in R&D and ERP systems like SAP, with normal levels around EUR 4 million per quarter anticipated going forward.

Moderating Growth yet Above Industry Standard

Executives kicked off the call by addressing a noticeable deceleration in the company's revenue growth, falling short of initial expectations for the year. However, this needs to be put into context—the previous year's growth figure of 43% included a one-off revenue boost due to higher component costs absorbed during supply shortages, a non-recurring situation. Absent this anomaly, the company maintains a strong year-on-year growth rate above 20%, showing resilience despite recent industry-wide challenges.

Impressive Margins and Wise Operations Management

The company reported a gross margin of 49.5%, a notable 200-basis-point increase over the previous year, driven primarily by better component pricing post-chip shortage and business expansion in the CLEA segment. Additionally, disciplined operational expenditure (OpEx) control has led to a robust EBITDA of 23%, amounting to EUR 37.3 million. This disciplined approach resulted in a positive operating cash flow of EUR 14 million over the nine months, signaling good financial health.

Expansion Across Verticals and Geographies

The executives emphasized the company's diversified growth across various market verticals and global regions, which helps mitigate risks tied to single-market dependencies. They underscored a 12% growth in edge computing and also highlighted that the software business, which represents over 10% of their sales, grew by approximately EUR 2 million from the prior year. This diversification is key to the company's resilience and ability to adapt to changing market demands.

Innovative Product Pipeline to Fuel Future Growth

Looking ahead, the company is excited about its pipeline of innovative products set to launch in the coming years, which include a new family of AI-driven products optimized for performance and cost-efficiency. Moreover, the modular vision family presented at a major industry expo has already garnered customer interest and potential orders. Furthermore, expanding the reach of the IoT AI platform CLEA by promoting it globally and adjusting commercial strategy to attract more customers is expected to contribute significantly to revenue steam and market penetration.

Positive Financial Trajectory

Company leadership provided a reassuring financial outlook indicating a stable net financial position, with a cash flow increase to EUR 14 million compared to almost zero in the same period last year. Inventory levels were optimized, with a reduction of EUR 3 million despite higher sales volume, demonstrating a better cash generation that not only covers maintenance but also enables development investments to support future growth. The fourth-quarter revenue is expected to show record levels, with an anticipated increase in net financial position by the year-end, highlighting the expectation of continued strong cash generation.

CLEA's Growing Contribution and New Customer Growth

CLEA, the company's IoT AI platform, demonstrated a solid EUR 5.5 million in revenues for Q3 with EUR 3 million being recurring. The rapid growth in this segment, with a quarter-by-quarter increase, highlights its significance in the overall revenue mix. Moreover, the company's strategy to reduce initial customer fees to spur quicker adoption has been effective and is expected to bring in substantial new customers who will contribute to mass production and recurring revenue by the end of 2024 or start of 2025.

Earnings Call Transcript 2023-Q3

[Massimo Mauri, executive]

Thank you very much and -- to be here. And let's start in commenting the first 9 months revenue results. I want to say clearly that our growth is not as strong as we expected at the beginning of the year. Anyway, I want to share with you some consideration about it.

First of all, let me say that last year, we grew at 43%. It included around EUR 14 million of PPV, meaning that last year, we saw that due to the shortage components at a very higher price compared to the normal, basically, we was forced to acquire components at very normal price at EUR 5 -- at EUR 50. And therefore, we invoiced customers for EUR 50. This was a one-off revenue. And if we offset it from the 2022 result, well, at that point, our growth path still above -- well above 20% year-on-year.

The slowdown anyway that we observed in our growth path over the course of the last 3 years. We started the year very strong at 28%, coming down to the last quarter, which is basically equal, slightly negative, 1% less. The last year is mainly driven to two factors. One is the customers are basically postponing orders, not canceling them, but postponing them due to economic condition. And the second, we still have some overdue backlog. Anyway, we are planning to resolve it and to cover it by the end of this year.

In terms of margin, I should say that thanks to mainly two components. One is the fact that the shortage is over. And so we was able to get the components at the right price, and thanks to the CLEA business expansion, our margin is quite good 49.5% over 200-basis-point better than the last year. This together with a good control in OpEx driven us to a 23% EBITDA on the revenue equal to EUR 37.3 million. I think it's important also to say that we generated around EUR 14 million of operating cash flow in the 9 months, and that's not bad at all for me.

And in terms of outlook, we think that the last quarter of the year will be good in terms of revenue, and we expect it to see clear jumping over EUR 7 million revenue in a single quarter. This is driven by the recurring revenue part of CLEA that is growing and driven by new customers, that are starting in entering into CLEA world and so paying the one-off fee at the very beginning of the relationship.

So last point, I think we should consider looking at our results as the SECO overall -- SECO performance are pretty well and definitely better than our main Taiwanese competition, which is basically based by the fact that we are very well diversified into many different vertical market. We have more value-added that we are bringing to the customers, thanks to our capability to design a product to fully integrated to be manufactured in the right way in one hand. And thanks to the CLEA and AI services that we are adding to our product, generating value for our customers as well as for ourself.

Let me now hand over to Lorenzo. He will illustrate to you more in detail our financial results.

[Lorenzo Mazzini, executive]

Thank you. Thank you very much, Max, and good afternoon to everybody.

Well, in this slide, we present to you our key financial indicator for the 9 months ending Q3 2023. As you can see for what concerns say, we have, as Max already explained, a good performance, we increased in a significant way in absolute terms for what concern edge computing business. It has been growth in the 9 month '23, with respect to the 9 months '22, up 12%, but really good performance also for the software part of our business that are above 10% of our sales and increase respect to the same period of 2022 by about EUR 2 million.

Really important is the performance that Max already explained relating to gross margin. We improved the gross margin respect to the same period of last year by 2.5%. This is a really great result because, for sure, there is a component that the shorter situation is almost solved, but we put in place a really effective strategy in terms of purchasing actually all the components in the right moment of the market and also covering the cost at the right time. So this has been able to give us a really good performance in Q2, but also in Q3.

Thanks to this factor and for sure thanks to the proper control on the OpEx, we achieved a more than proportional growth in adjusted EBITDA, respect to say, it's actually, you can see that adjusted EBITDA grew at 16%. But more important, the profitability of the company is increasing in respect to the same period of last year by 1 percentage point, and we are at 23% of EBITDA that for sure is a good level for us. We can do better, but it's a really good level for this time moment and for this actual environment.

Regarding -- instead adjusted net income, you can see that the profitability is around 10% like the same level of profitability of the last year. Let's say, I would like to say that this key financial indicator for, let's say, the quarter during the year is not so significant due to the fact that, as you know and as highlighted in this slide, the taxes are calculated in a theoretical way as every other listed companies. So there is not specific calculation of all the tax benefit that we may have. And another important point that we have a full impact of financial expenses on the P&L, but we do not accrue instead the active. So the positive financial interest that we are going to gain, thanks to our derivative policy that hedge our important loan, our acquisition financing that we've taken for the acquisition of Garz & Fricke today SECO Northern Europe.

Thanks, Max, to pass to the next slide. Well, just we a quick snapshot on our sales and our breakdown by geography and by verticals, so by end market. As Max already told you before, this is a really strong point of our business and of SECO that is the really good diversification, firstly, across the most important geographical areas in the world, but most importantly by verticals. As you can see, actually, our growth is really well spread over the geography and the vertical. And this is an important factor that allow us to continue growing and also mitigate a lot of the risk of being linked or dependent by a single geography or a single sector.

We can move to the next slide, and I'll talk a little bit more about our profitability.

[Massimo Mauri, executive]

Well, before doing it, I think it's important to outline that the CLEA business is around EUR 16.3 million in the first 9 months with a growth of 12% year-on-year. And more important, the recurring revenue part of this business is around maybe 40%. And as I said before, is growing quarter-by-quarter. Thanks, Lorenzo.

[Lorenzo Mazzini, executive]

No. Thank you, Max, for this underlying, really appreciate it. Well, just have a look more in details about our EBITDA performance that growth -- that grew by more than EUR 5 million respect to the same period of last year in absolute terms, but more importantly, in relative terms, so we reach 23% in respect to 22% of the same period of last year. Here, for sure, the support really important has been given by our gross margin that grew more than proportionally respect to our sales actually. The gross margin growth at 18% for the most reason, actually, as already told before, is a really effective purchases strategy that we put in place in components, but more overall so some good effect on the sales mix. Firstly, the software part that, as we saw before, that CLEA is increasing, is increasing also the recurring revenue part. And as you know, the software has a profitability either respect to the [indiscernible]. And so also this factor gives us an important contribution to achieve this performance in terms of profitability.

Just last remark on this slide, regarding the adjustment we do to EBITDA. Here, you can see that the biggest part is represented by the actuarial value of Stock Option Plan by EUR 1.2 million. You know that in July, we approved a new Stock Option Plan for the period, '24, '27 and actually, obviously, for the first time they accrued part of the actuarial value include also the part relating to this new Stock Option Plan. For what concerns extraordinary transaction cost, this relates mainly to the capital increase we did with 7-Main and by a one-off bonus relating to the acquisition we did more or less 5 years ago InHand Electronics that is today our U.S.A. legal entity on which we have a bonus for the people that remain in the company after 5 years.

Thank you, Max, for going to our slide regarding our performance in terms of adjusted net financial position. As you can see, we closed the 9 months at EUR 59.7 million. This is, for us, a really, really good results, in particular, if we compare this performance with respect to the performance of last year. Actually, if we adjust, let's say, the net financial debt beginning of the year by the EUR 75 million, let's say, EUR 74 million. We exclude the extraordinary transaction cost of the capital increase by 7-Main. Our net financial position remains stable in the period, that -- it's really good results. Actually, the company considered that they generate in the 9 months and operating cash flow of EUR 14 million respect to a number that was more or less close to zero of the same period of last year.

Actually, you remember that last year, due to shortage, we were obliged to increase a lot our inventory. The performance of operating cash flow has been driven mainly obviously from the EBITDA, but mainly due to the fact that we reduced a lot our inventory with respect to last year in relative terms, actually consider that the rotation of inventory decreased by more than 20 days. That means improvement on our inventory rotation by more than 10% actually comparing just the absolute figures. We closed the 9 months of '23 with EUR 80 million of consolidated inventory in respect to EUR 83 million of the last -- of the same period of 2022.

So we decreased inventory by EUR 3 million, but obviously, in a period in which we have much more sales due to the growth that the company is facing. So a really good indicator and the is showing that the fact that the net financial position remains stable means that the cash generation of the company is able to pay not just the maintenance CapEx, but also the development CapEx that we do in this year, a lot in particular, actually in R&D because, as you know, we are investing to support the growth of the next couple or even 3 years.

Thank you, Max. I leave the speech to you again.

[Massimo Mauri, executive]

No, thank you. Thank you Very much, Lorenzo. I want also to provide you business update in from the family of the new product that we'll launch on the market during the course of the 2024. It will represent from the end of 2024 and '25, a new revenue stream for SECO. And it will cover one of the main topics in our market for the next years. I think AI on the edge will be one of the most important value added for the customers. As you can see, we have a different kind of product that will be based on Axelera. As you know, Axelera is a cheap design specifically to run AI inference and maximizing the performance and minimizing cost and energy consumption. And the launch of this different kind of product will basically fulfill perfectly the customers' needs and will give to us an additional revenue stream that will boost our growth in the near future.

Another important new product that actually we presented this week in Germany to the Hannover Messe, a big exhibition in the industrial field that is taking place exactly now. Well, this is a modular vision family. And the purpose of this new family of display plus electronic together is really to provide customers a solution that they don't need to customize because actually it's already made by design to be, in some way, personalized to the customers. Is -- this solution is cost effective. It's really able to cut the customers time to market, our time to market. And so it's a great new product and from the exhibition that we already got interest and discussions and potentially orders on this new product in those days, which is definitely good.

Another update important is what we are doing to enlarge the penetration of the market about CLEA. As you know, CLEA is our IoT AI platform that is basically we kick-start the launch of CLEA worldwide -- at worldwide level. As you know, we keep it more locally for a while to be sure that the platform was working well. The platform is working well. The feedback from the customers are pretty good. So now it's the time to really push all the market and to promote this platform worldwide. Additionally, we also modify our commercial strategy with the intention to enlarge the customer base. And due to it, we reduced the one-off NRE fee to get faster customers and more customers to start with the platform.

This is an example, I think the EV charger station that we will present to CES in the very beginning of '24. It's a clear example how the cyclical competence and the cycle capability can bring value to the customers because we -- what you can see here is a full solution all integrated, based on our technology dedicated to EV charger station. You can see a display -- a couple of display on the electronic behind, a payment system, CLEA connection and all the AI apps that basically offer you as a user, a very, very nice experience with the capability for the owner of the EV charger station to monitor relevant KPI of the station like advertising performance, like energy store, like numbers of customers and so on and so forth.

So I guess this is all from my side. We will off to for live from the CES a bigger webinar on the EV charger station market, and we will send the invitation also to the financial community. But be aware that this is not a financial, let me say, moment, it's fully dedicated to business, so it will be very technical and very business-related anyway, if some money is interested, we will share the link to participate to it.

I think that's all from my side, and we can open now the Q&A session.

[Operator]

[Operator Instructions] Our first question today comes from Mr. Marco Vitale.

[Marco Vitale, analyst]

It's Marco from Mediobanca. Two questions from my side. The first one is on the outlook on Q4. I was wondering if we could assume that the quarterly revenue trend could follow the same path that has experienced also last year in the sense that is it fair to assume that you expect a record level in terms of quarterly sales compared to the other quarters of the year, and thus exceeding also second quarter of revenues that were close to EUR 59 million, consider also the EUR 7 million for CLEA.

Second question is on the profitability. I was wondering if we can say that as long as the chip shortage is over and the mix continues to be supportive or what concern CLEA and the recurring revenue attached to this. If this is correct, then we can assume a gross profit in excess of 50% also over the coming quarters? And then the last question is about cash generation. If an acceleration in the Q4 could have some impact on net working capital trend for the final part of the year? And what level of net financial position, we expect into year-end.

[Massimo Mauri, executive]

All right. So let's start from the revenue. I think, yes, the last quarter, historically speaking, is the quarter where we do more revenue, and it will be true also this year. Moreover, I think in terms of margin, the margin that we are expecting on the first quarter are pretty good, driven by, as you said, the mix, but driven also by CLEA that is growing a lot in the quarter. So we were expecting to have a robust margin over there. Last, yes, we expect to generate cash in the third quarter. So we expect our financial -- net financial position at the end of the year will be better than what we posted in the 9 month. So more or less, that's our -- the answer to your question.

[Operator]

Our next question today comes from Ms. Arianna Terazzi. Okay. We're going to move forward. And our next question today comes from Mr. Matthis Sarrazin.

[Matthis Sarrazin, analyst]

Can you hear me?

[Massimo Mauri, executive]

Yes. Perfectly.

[Matthis Sarrazin, analyst]

It's Matthis Sarrazin from Credit Mutuel Asset Management. Just a question on CLEA, on the EUR 5.5 million in Q3. Can you give us the main driver? Is it new customer with upfront fees, or is it the ramp-up of production regarding the sequential growth, the quarter-on-quarter growth. And same question for the EUR 7 million in Q4, do you think the growth will be driven by the ramp up in production or new customer.

[Massimo Mauri, executive]

Right. I will say for both the quarter is a mix in between the two, meaning that we had 40% of the total EUR 5.5 million were already as per recurring revenue, meaning we already reached around EUR 3 million per quarter in recurring revenue. And it is growing quarter by quarter. The rest of the part is driven by new customer. As I said, we decided to lower basically the initial fee that we was charging. It was in the range of EUR 1 million per customer, which is now in the range of EUR 0.5 million for customers. It really depend from the dimension of the project. But this is something in between EUR 1 million maximum and EUR 200,000 minimum, so I think it's fair to say that this is EUR 0.5 million per customer.

And in Q4, we will have also -- we actually already signed important new customers that will start their project to be in mass production, generating recurring revenue end of '24, beginning of '25. So -- and moreover, as I said, the recurring revenue part is growing every quarter. And I think we will be over EUR 3 million by the end of the year. So at -- EUR 3 million in a single quarter. So that's an important results after only 1.5 year from the launch, even considering that in our industrial field, you need to spend time before entering mass reduction because any customers need something very specific.

[Matthis Sarrazin, analyst]

Okay. Very clear. Just to jump on that. How many customers did you convert from your pipeline to real customer during Q3? And how many do you plan to convert in Q4?

[Massimo Mauri, executive]

Yes. As I said, more or less between 5 and 7 customers in Q3, and they will be significantly more end of this quarter.

[Matthis Sarrazin, analyst]

Okay, okay. Very clear. And just to recap that how many customer today are in the mass production phase.

[Massimo Mauri, executive]

So we have a total of 25 customers end of first half which is now around 30 customers as a total. I should say half of them are into mass production, less than half.

[Operator]

Our next question comes from Ms. Arianna Terazzi. She has written her question in the chart, so I will read it.

She states, "The first question is, could you elaborate on your expectations for FY '24 so far, considering you were mentioning in the past calls that some orders could go in mass production." Her second question is, "Then I would also appreciate an update on the current order backlog?" And the third question is, "My last question regards to new product families, can we expect the same kind of margins from them versus the current business?"

[Massimo Mauri, executive]

Can you -- okay, I got all of them. So first of all, about the 2024, we are working on the business plan right now. So we'll be able to provide indication later in the very beginning of the next year. Just in general, we will have new customers that will start entering in mass production, both hardware and software-wise next year. Moreover, we will have a very big and important European customers that will grow significantly next year. We already had the meetings. So we will have another meeting actually this week with these important customers to secure all their demand in terms of supply chain for the next year. And that will be, for sure, provide a positive effect in terms of growth.

Moreover, I expect that the dynamic that we observed in terms of customers that are delaying orders, moving orders from a quarter to another, it's not over yet. So I expect to see it continuing for couple of quarters, at least. So we are now making all the calculation from the positive, let me say, the negative effect, and we will come out with some indication at the very beginning of 2024. Generally speaking, SECO will be good to go, for sure, at which kind of speed, let's see it at the right time.

Second question was related to order backlog. And as you know, we are not providing this kind of information. So I do want to say nothing else about it. The third question was about the margin that we are expecting to have on the Axelera business. I don't think Axelera business will be very innovative and will drive business, hardware business basically at 50% margin, which is in a very high part of the margin that you can have with a hardware customer.

[Operator]

Ms. Terazzi, if you do have any follow-up question, please feel free to write them in the chat.

Our next question now comes from Mr. Matthis Sarrazin.

[Matthis Sarrazin, analyst]

So a question on CapEx. Can you come back on the level in Q3? It seems that it's double the level compared to Q1 and Q2 this year. So just to understand where you are investing the money now, and what should we expect for the Q4 and '24?

[Massimo Mauri, executive]

Yes. I'll leave maybe Lorenzo to cover this one.

[Lorenzo Mazzini, executive]

Yes, yes. So then -- thank you. Thank you, Max. Well, for what concern also the Q4, we expect it to continue in the same path because we do not have an important peak or, let's say, fluctuation by quarter for what concern our investment in R&D, that is the biggest part for sure of our CapEx and accounts more or less for 75%, 80% of the total CapEx that you can see on our cash flow statement. So I could say that the level of the Q4 will be similar to the level of Q3.

[Massimo Mauri, executive]

I would say that Q3 was significantly higher comparing the first 2 quarters because of SAP. As you may know, we was live with SAP in Germany because now Germany is using same kind of ERP that we are using over. All our group, it will drive significant synergies in the forthcoming years. And only this project, we -- unfortunately cost us over EUR 2 million. And most of them are included into the Q3 CapEx.

[Matthis Sarrazin, analyst]

Okay. And just I finish on that, what is the usual normalized level of R&D per quarter or per year?

[Massimo Mauri, executive]

It's around EUR 4 million per quarter, more or less.

[Operator]

Our next question today comes from Mr. Bharath Nagaraj.

[Unknown Analyst]

I have one question, please. I understand that the product mix of your peers in Taiwan and elsewhere is quite different from what you're doing. But just do you have any comment on how they've performed related to yourself? Are you seeing them also trying to replicate your success in customized solutions and in CLEA?

[Massimo Mauri, executive]

Yes. I think if you look the performance of our main competition in Taiwan and referring, in particular, to [indiscernible] and [ DigiLink ], they both posted 20% decrease year-on-year revenue during the Q3, and decreasing as well as into the margin, which is not the case of SECO. Thanks to the fact that, as you said, we are selling more customization to the customers. We are selling more software to the customers. Actually, what we combined together our capability to design and product and hardware system, well customized for our customers together with a full stack of software is actually a unique value proposition that we can bring to the customers. I don't see any kind of competitor that can really provide the same kind of integrated solution. And thanks to it, actually, we are significantly outperforming the market.

[Unknown Analyst]

Sure. If I may ask one quick follow-up question, please. In terms of your future, let's say, steady state operating margins, how do you see yourself, where do you see yourself getting to?

[Massimo Mauri, executive]

Well, I think our company and the strategy of our company is designed to increase our profitability as we go year-on-year because of the growth of the software business and because of the growth of the vertical integrated solution that we are combined based on the experience that we are making on the market as per ready solution, plug-and-play solution by verticals. And this is very important, so our company will continue to grow the profitability progressively year-on-year.

Of course, we have a strong correlation in between the level of revenue and the profitability due to the fact that we have 75% approximately of our cost as per fixed cost, mainly people, wages. And so if we reach a good level of revenue, we can do a good margin. There are two points that are driving the profitability. One is the level of the revenue, and the other one is the gross profit margin. And the strategy is designed to be able to outperform the market as actually we are doing on the revenue growth in terms of the next 3, 5 years. Moreover, to increase progressively our gross profit margin, it will driven us better profit and better cash flow generation for sure.

[Lorenzo Mazzini, executive]

Sorry, Max. Let me add just one important point that I do not say before relating to the CapEx and to the question on the CapEx. Just in Q3, and I now understanding the question that you are looking tangible CapEx, we have a one-off effect that will not repeat again in Q4. That is just an accounting matter because for new rental contract that we had for new offices in Italy and in U.S., the auditor make us account this new contract according to IFRS 16, and the value is slightly more than EUR 1 million. So I didn't, let's say, say this effect before because I was thinking about our intangible CapEx. But the tangible CapEx, there is slightly more than EUR 1 million or just one-off effect that is just the reclassification due to the application of IFRS 16 on this rental contract.

[Massimo Mauri, executive]

Thank you, Lorenzo. This could be helpful.

[Operator]

Currently, we do not have any further questions queued. So we will wait just a few moments to give everyone the opportunity. If there are no further questions, I will now hand back to the speakers for any final comments before bringing this presentation to a close. But please, if you do have any follow-up questions, do feel free to reach out to the team.

[Massimo Mauri, executive]

I noted that there is a question from Pietro Nargi. Please, Pietro.

[Unknown Analyst]

Just a quick question about the end markets. Looking at the third quarter results, it seems that industrial automation was lower year-on-year. So if you could provide also a qualitative outlook on the market condition across different end markets. And if also in terms of geography, if you could provide a comment on the market stance in the U.S., in Germany and also in Italy.

[Massimo Mauri, executive]

Absolutely. In terms of end market, we are observing a very different kind of dynamics from market to market. Just to give you some example. On the vending machine, on the coffee machine, on the solution related in general to appliance, we are facing a big increase into the demand for the next year. In medical sector, I think nowadays is the worst sector because it's decelerating a lot and customers are basically delaying the shipments of the goods also for 2 quarters or more.

So I got two different kind of sectors. Just to give you an idea how different is the trend entering in different kind of verticals. This is important because, as you know, SECO is very horizontal, so we are covering many, many verticals. In fact, we are expecting to see military bounce back in the 2024, it was decreasing in 2023 and industrial continue to suffering at least for the first couple of quarters.

So the company is very well balanced to really drive growth even in this kind of, let me say, a very complex scenario where we have super high interest rates in one end that is reflecting customers, and any customers try to squeeze the working capital, reducing the pieces in their inventories. And in another end, it's also arcing the demand. So the demand is slightly correlated with customer's order. But moreover, we have, as you know, a lot of geopolitical tension that are not helping customers in looking the future in a positive way. So this is the reason why we are living into a very difficult windows that I think is going to be continue for -- to a couple of quarters.

Anyway, end of the story, SECO is strategically positioned to continue to grow, maybe a lower growth path as we expected in the past, but to continue to grow significantly for the next future. So that's it. And when it will be over because of the interest rates will become to be [ cutted ]. At that point, our company will accelerate again the growth path.

[Operator]

I will now hand the word back to the management team for any final comments before bringing this presentation to a close.

[Massimo Mauri, executive]

So I don't have any further comment. I would like to thank you all for your time today. Of course, Lorenzo Tosi is always available if you have further questions or any request of having more information, we are here to provide it. And thank you very much again for your time, and see you soon. Bye-bye.