Kempower Oyj

OMXH:KEMPOWR

Earnings Call Transcript 2024-Q3

[Paula Savonen, executive]

Hi, everyone, and welcome to this webcast where we present Kempower's financial results for the third quarter 2024. My name is Paula Savonen. I am the VP of Communications at Kempower, and also the host for today's webcast.

Today, we have 2 presenters. We start with our CEO, Tomi Ristimaki; and continue with our CFO, Jukka Kainulainen. And you can ask questions any time during the presentation by typing in the Q&A box on the screen. And we really hope you ask the questions and actively join the discussion. And we take all the questions in the end of the presentation.

But now we start and over to Tomi.

[Tomi Ristimäki, executive]

Thanks, Paulo, and welcome from my side as well. Going to the quarter in brief, I think it's clear that the challenging market conditions are the same. So high customer inventory levels prevailed and customers' low decision making continued to impact the sales performance.

How we have come to this high inventory situation in customers' installation stocks, we could remind on the topic on this high amount of purchasing in the fear of component shortage after the COVID. And then, of course, the market not being able to deliver the grid connections needed for this large quantity order.

So basically, the message is that the grid installations haven't been getting slower. Actually, I can show figures how it's actually getting faster. But the high amount of orders, of course, made it so that this couldn't be done in the pace that our customers were hoping.

Market situation. Year-to-date installation grew significantly in both Europe and North America, which tells that the charging market is actually growing. So looking at it from that point of view that now the goods are coming to the warehouse to the sites, but the actual charging networks are growing all the time.

New customer acquisition. Of course, in the situation when current customers have this stock inventory, it's very important to focus on new customers. And we onboarded 12 new customers in Q3, totaling actually 44 new customers for the year.

Strategic developments, which is a big milestone, that the ramp-up of next-generation product portfolio is now completed. This doesn't hinder revenues from customers ordering the new when we have the full capacity in use.

North America revenue for January and September more than doubled. And as a big milestone for our U.S. Market, we acquired the first customer under the NEVI funding program. And I could remind that was actually one of the main reasons to actually have the U.S. Entry done 2 years ahead of the schedule.

Profitability improvement. We are progressing well towards in targeted savings, which is actually to make a profitable Q4 this year. And could also remind on the strong financial position, we have one of the strongest liquidity positions in the DC charging industry.

Looking at a little bit more on the customer inventory levels, they affect our own intake from the existing customers. And I could say that, customers who are bringing the largest revenues, largest orders in '22, '23. And as we anticipated in June, in this similar session for our first half of the year, the decline in inventories is not significant.

And we are now estimating the excess inventory on the market to be around EUR 80 million and remain high until the first half of year 2025. Positive new customer acquisition will still dilute the effect of high inventory levels. So this is actually why we are concentrating a lot on actually on boarding new customers.

Electrification megatrend continues. There's a lot of debate. We hear it from the media that maybe the EV cars are not selling. There is something happening somewhere. Green transition has put a question mark to it. But if we look at the data, the installations are growing 18% in Europe from year-to-date figures. So it means 18% installations per quarter compared to the last year and 74% in North America. So the charting networks are really growing quite rapid pace.

And the share of electric vehicle registrations in January to September 2024 is at the same 15% level. So this is actually something that this means it's all the time we have more electric vehicles on the market, so 15% of all new vehicles.

In North America, the percentage is lower, but this is a new market, but let's say, the change rapidness has been faster. And we see actually the amount of electric vehicles in North American market that it's not that much behind Europe even when we talk about the percentage, but the high amount of cars actually makes it that the amount of EVs on traffic is actually gaining Europe from the -- let's say, quantity point of view.

And what is also very positive change when we look at that the customers funding, looking at investments in the charting network and charting network companies, that's recovering 2024. This 2023 compared to 2024, when we look at the funding of our potential customer base, this is recovering and it's recovering actually quite significantly.

And on the sales recovery, it's progressing step-by-step, onboarding new customers. I think the -- also when the customers are not in a hurry, the qualification periods for pilot deliveries, pilot sites takes more time. So the customers are testing the products more thoroughly.

So when you gain the new customers, you have the first sites. I think compared to the last very rapid years, before the big deployment starts, there's a longer testing period because it's the carefulness of customers that they really have the right solution. And we could talk about 4 months, 6 months testing periods with the first deliveries and then decisions to actually start ordering in larger quantities.

And the steady expansion of our customer base positions us well to regain momentum and return to our growth track. This removes a lot of risk when you're wide customer base. This means that you are less affected with certain movements or single customer events.

So I think it's a key thing for us to grow the customer base even more to divide the risk over the large customer base. And ramp-up of the next-generation production portfolio is completed, and it's no longer limiting revenue growth in quarter level.

And some examples. I think it's great to show like examples on having a first site inside New York and especially in Manhattan. So that's a Pier 36 in between Brooklyn and Manhattan on the Manhattan side. And this is -- these kind of sites are really good showcase for the market.

And another one, new things happening in India. I think we have a couple of rollouts going on in India. This is a new market for EVs, but actually very promising market. We are looking at this more in the business development sense that is there a good market for Kempower or not, but we are today like the rest of the world segment. We operate through key partners and actually all the time due to business development.

The main focus of Kempower is, of course, in strategical markets in Europe and North America. But we do look the other parts of the world to really see where the growth happens and be there on the right time.

And also mentioning, I think, what we have told before, and I think the sentiment is getting even stronger, that the biggest DC charging market by 2030 will be the truck charge. There's a very clear message. It's also on the ambition level on truck manufacturers, where they see that their sales to be, how big percentage from their sales the battery electric trucks will be. And this is being more and more strong messages from there. There seems to be a lot of interest, and we see this not only in Europe, but maybe even stronger in the U.S. side.

And this side here is the first logistic hub with Kempower fast charging in France. And there is a steady progress in North America. The revenue on January to September '24 more than doubled. And there is a good sales pipeline, and there is room to grow in the market. We're also talking about the market where the DC charging installation grows 74% compared to last year.

And the first customer acquired under the EUR 5 billion NEVI funding program and significant new customers. As description from these 12 new customers, there was a global truck OEM from U.S. And also Fortune 500 Energy Company from U.S.

And the ramp-up of the next-generation product portfolio completed. Very key thing for Kempower this year, this is actually very large project when you actually renew the whole basis, the platform behind your products, and you do it within the first 5 years of the company. And this was first renewal of a platform is a big thing. And now we see actually that we are in a normal state in production and a good quality level. Production yields are very good. So we are ready to actually ramp-up, let's say, ramp-up the deliveries as well.

So the production is ready, product is ready. And it will provide top of the class performance to our customer. And we have also published white papers on the topic, but it has exceptional power factor efficiency. I think the key here is efficiency because this better performance to our direct customers who are selling the electricity. So this is direct OpEx improvement in our customer base.

Technological Development. This is going again, of course, as a Kempower's core is actually the P4 runner in the market. And we were the first company to bring MCS to the market, with market launch.

And the first true MCS delivery and also step increase in our standard CCS series that we go up to 700 amps, we will do in Q4 2024. These both are really targeted into heavy vehicle charging. If we are talking about trucks, we are talking ports, but the machines with big batteries and heavyweight.

And another key thing with California. This is very similar we have been discussing on this InCred certification for Germany, which means accuracy of electricity measurement compared to the payment.

So the CTEP certification is now stated. And it certifies Kempower's equipment regulatory standards, protecting consumers of faulty and fraudulent devices. And as a side note, Kempower was the first charter manufacturer who could actually comply CTEP requirements without additional electricity meters.

And also looking at our product portfolio and what is the whole idea. When we look at our portfolio, the leading idea from our side from the beginning has been that there will be a lot of electric vehicles. There will not be single charging sessions, but single vehicles in the market where the adoption gets higher. And this is the whole idea why we have the distributed charging solution we'd call it the satellite solution, where you have a limitation on the grid power but you use this limitation to the biggest amount frequency of charging. More transactions based on grid connections, which means directly business benefit to our customers. That I would say is the key when you look at the public charging segment here.

You do have on the market still the legacy chargers when we have these charging stations of cabinet with 2 cables. But we see the movement that is I think led by Kempower and Tesla going into this distributed charging systems and larger installations. And this is something that we see a key when we look at also the commercial vehicle charging. We look at logistic hub where you have several vehicles. Size is limited. You have actually better movement in there.

Could remind also the importance in the ChargEye software as a key in actually increasing the sales. But it's also its own revenue stream in our service in recurring revenue that we see now increasing and especially important interest is raising from the Commercial Vehicle segment.

And then looking at what are the markets in the future. Our vision is to create the world's most desired EV charging solutions for everyone and everywhere. This is part of the story why here we have these different animals in brand pictures as well. It's for everyone and everywhere. And I think we could tick the box also in this vehicle types, maybe not the agriculture yet. But we see that there is movement in every vehicle type. It makes it also in the market very interesting when you have a growth state segments popping up new and new.

I would say, the buses are more mature state. There is a high number of buses now converted to electric. It's going near to 50% of new vehicles being electric throughout the Europe.

Personal cars are moving, but that's consumer-driven market, and that's also something that relates to consumer car sales. But on the Business segment, the trucks are showing high growth rates. Some might say that it's easy to grow from a small percentage, but this is actually something which is backed up by plans with the truck manufacturers. It's also very much requested by the logistic company, because it affects GLIDA directly to the total cost of ownership figure.

Other segments, I would say, in increase, we see from port machinery. And of course, the vans are going together with the trucks. But then it was really interesting now to be also charging airplanes. That's an interesting future segment or construction machinery going into electric. We commissioned that there was a nice story on that we made charging site in the U.S. making electricity with electricity, so every machine was fully electric in that.

So there are different stages of the market, and there seems to be a growth segment in here. I think in the difficulty, I understand why agriculture is not really moving fast, because that's hard to handle in that environment. But I would say that this is the vision that it's also that these target segments are not only personal cars. It's not only trucks. When you look at the further, it is the machinery market. It is different ways of traveling. It's on air or on water.

And sustainability achievements, step-up change in EcoVadis evaluation going now for silver label. That's done. Also renewing our Nasdaq Green Equity designation. An important figure also, we see how the usage of our product is increasing. When we look at that, it has doubled from '23. So 1.1 gigawatt hours per day. And from sustainability view, this energy would have been produced by fossil fuels, if it's not electric vehicle. So this is the difference we are making. It's the best measure for that, what is the impact to the world.

And then I give the stage for Jukka on the financial side.

[Jukka Kainulainen, executive]

Thank you Tomi. Yes, let's go to key financials for the quarter. Quarter 3 2024 financials were still impacted by the ramp-up of our new next generation charging portfolio, which had some supply restrictions still during the quarter. And also on top of that, we made additional EUR 5 million warranty provision.

If we look from the positive side, of course, our gross profit margin 51% is a really healthy level. It's a strong number. It's good number for the building the future as well. But when going to the profitability, which is impacted, of course, by the low revenue, and of course, high fixed cost as well, and reflected in the operative EBIT of EUR 7.9 million negative. But at the same time, we have taken those actions regarding our cost side and we have this target of EUR 10 million annual savings, and we are well progressing with that target on our daily life.

On top of that our operating cash flow was negative for the quarter EUR 9.3 million and that was resulted from the negative result. CapEx investment and also increased networking capital regarding the accounts receivables. Of course, these are not the numbers are not -- the numbers are not on the level we would like it to be and cannot be satisfied overall. But the actions we have taken are all the time the correct ones and taking us to the better direction.

Then going a little bit more in details about the order intake for the quarter. Weak order intake rounding up to EUR 52 million for the quarter and EUR 151 million for the first 9 months and that was negatively affected by the high excess inventory on our customer side, and also challenging market conditions, which are slowing down the decision-making on our customer side. Order backlog at the end of the quarter was EUR 100.2 million.

Then regarding the revenue. Our revenue during the quarter reduced by 28% year-on-year was around EUR 52 million and in first 9 months revenue was EUR 152 million. And this was like I commented earlier was negatively impacted by the ramp-up of the next generation charging portfolio, which limited our production volumes. But like Tomi mentioned, of course, the great highlight is that we have now completed the ramp-up, and we are in the normal state with the production. So it won't anymore restrict our volumes or revenue generations either.

During the January and September, of course, highlight -- great highlight was that North America growth, it grew by 127%, so more than doubled. And rest of the regions decreased during the quarter. But also adding few more positive highlights inside the regions was definitely the DACH area and Benelux. Those both regions, our areas actually doubled their revenues during the first 9 months of the year.

Then looking our profitability and cash flow development. Operative EBIT EUR 7.9 million negative and was impacted, of course, due to lower revenue, but also with the increased fixed cost base, and of course, this additional warranty provision of EUR 5 million, what we accrued relating on the on the old generation product portfolio.

Then regarding the operating cash flow, negative of EUR 9.3 million, but at the same time, we have all actions on going to improve our net working capital and reduce our inventory levels on our balance sheet in order to improve the cash flow during the quarter 4 and release the capital employed on the balance sheet.

It's really important what we want to address also, we have one of the strongest liquidities in whole DC charging industry. We have more than EUR 100 million liquidity on the company, which means that we stand also a little bit headwind in the company and weaker quarters like quarter 3 was for example.

Then regarding the headcount development, regarding the short-term reduction in the revenue like we have adjusted our cost base and have taken actions to reduce our cost base overall and targeting this EUR 10 million annual savings. And in quarter 3, we concluded the change negotiations, and as a result, we will reduce around 90 people from our headcount during the H2 2024.

And how did we do the reductions? So we prioritized the reductions in a way that we didn't want to endanger, of course, our technological roadmap, technological development and at the same time, the customer interface, customer experience either. And when looking our current organization, our current resources, we can well manage our strategy execution on the short-term without any kind of problems.

Then a little bit more about regarding our profitability improvement. It's progressing according our targets. So on top of the personal reductions, we also made actions regarding the temporary layoffs, which are ongoing in Finland. And on top of that, we are also limiting the external spending on the group level in all the entities.

And like I mentioned, our target of saving EUR 10 million annually that is progressing well. We are progressing towards that target step-by-step. And that is actually a really good link on our guidance as well, like we are communicated to be in breakeven in operative EBIT in quarter 4 2024. So we are well in target with that journey as well.

Then regarding Kempower's outlook, we have specified our outlook for 2024 regarding the revenue. So our specified outlook for revenue is between EUR 220 million up to EUR 230 million. Our previous outlook for revenue was between EUR 220 million up to EUR 260 million.

Regarding operative EBIT margin, we haven't changed the operative EBIT margin guidance. It's still that we expect it to be negative for full year, but should be at breakeven in quarter 4 2024.

Then regarding financial targets unchanged as well. We target the revenue of EUR 750 million between years 2026 up to 2028. And in the same time frame, operative EBIT margin between 10% up to 15%.

Thank you.

[Paula Savonen, executive]

Thank you, Tomi. Thank you, Jukka. And thank you already now for a great amount of questions and we start with customers and new customers. So how large share of your third quarter's new orders came from new customers that were not yet material to you in 2023?

[Tomi Ristimäki, executive]

It's good. I think we look at which new customers have made their first agreements or orders in 2024. So what is material. But I think Jukka has the number.

[Jukka Kainulainen, executive]

Yes. When looking the whole year, so around 1/5 of our orders are coming from the new customers.

[Paula Savonen, executive]

1/5?

[Jukka Kainulainen, executive]

Yes.

[Paula Savonen, executive]

Thanks Jukka. Then there is a question about gross margin. Your gross margin was strong. Could you open reasons behind this? Have you seen pressure on pricing?

[Tomi Ristimäki, executive]

I think it's in this competitive situation, of course, you are more flexible to also go with more aggressive pricing in there. But when there is kind of this storage on the market or this kind of inventory in the market, the price is not affecting the decisions that much, but we do see more competition on the price level to actually appear when the market of, let's say, attainable market for short-term is limited.

[Paula Savonen, executive]

Thanks Tomi. Then we go to the EBIT margin. Your operative EBIT margin was negative 15%. How do you expect to reach breakeven during the fourth quarter?

[Jukka Kainulainen, executive]

Yes. So there is actually 3 things in the fourth quarter. So our revenue will be highest for the whole year in quarter 4 that's of course driving the EBIT as well, but at the same time, of course, we have done these cost savings like I communicated earlier. And then it's good to remember when you look quarter 3 numbers, this additional warranty provision of EUR 5 million was part of this negative minus EUR 7.9 million operative EBIT.

[Paula Savonen, executive]

Thanks Jukka. Next question is about new customers. When you indicate that you have onboarded a new customer. Does that mean that they have completed all the test periods or that you are delivering pilot or test solutions?

[Tomi Ristimäki, executive]

Again, a German answer, ja in yes and no. Depends on the customer, because some customers before they make us, let's say, the first pilot orders, they complete testing already at their own facilities and some are actually concluding it with the pilots.

So I think when we look at the new customers, if the customer is in piloting phase, we consider the new customer, because there has been a significant order in and this is progressing.

[Paula Savonen, executive]

Thanks Tomi. Next we go to the overall market situation. Can you comment on the overall market situation from the point of view of how your competitors are doing? Are you doing better than them for example in terms of order pipeline?

[Tomi Ristimäki, executive]

I think this is also one reality we have to face that most of our competitors do not publicly report their figures. So this is pretty difficult to define. It's hard to make a comparison.

The sentiment from the market, you can find on some bigger large customers who are reporting then in a big report, let's say, the charging, the message is the same. It's stagnant or lower. So it is a challenging market for DC charging industry in total, because I think the inventory levels are not affecting Kempower only. It's a situation with every supplier almost on the market.

[Paula Savonen, executive]

Thanks. And the next question is actually from the inventory balance. What percentage of your inventory balance is the old generation chargers? And is there demand for these chargers giving the launch of the new platform?

[Tomi Ristimäki, executive]

We do not have an inventory ready-made goods. That's not a large proposal. We make products to order. And let's say, when we look at our parts inventory, which you can find on there, the proportion of is quite small, what is related to the first generation of chargers. And we did the reductions already earlier this year, like you can find on the reports as well.

[Paula Savonen, executive]

Thanks Tomi. Next we go to the order books, order book sales margin. You indicated in the second quarter that you were willing to cut pricing to win business. What is happening to the order book sales margin? And what is happening to the market prices in this challenging situation?

[Tomi Ristimäki, executive]

I think in the short-term, when you say that you are being more aggressive to fill in the order books of this year, this is not talking about a long-term thing, and it's about the market situation. I think we don't see material change there.

[Jukka Kainulainen, executive]

No. We don't see. But like we are still, of course, a little bit willing to adjust like you see, it's really healthy margin what we have at the moment.

[Tomi Ristimäki, executive]

And also where you see the kind of other margins on the market on the ones who are actually reporting, it is actually quite good situation to be in competition that it's a solid base that you can actually do price competition and your results are not jeopardized by this.

[Paula Savonen, executive]

Thank you. Next, we go to North America. You want a new customer that has been involved in NEVI projects. What kind of company is the customer? Are you the only listed supplier for the customer? Have your chargers already been used in NEVI protests? So can you elaborate a bit?

[Tomi Ristimäki, executive]

This was like, I said, it was the first NEVI customer, and it's the first sites funded by NEVI. And there's different kind of companies where it could be energy companies, could be kind of charge point operators, but there is various companies. I could say, this is more like, let's say, charge point operator as installation company. And more will follow if we can actually publish and get the permission from the customer to tell about it. Yes, of course.

[Paula Savonen, executive]

Yes. Then about the North American sales. North American sales only marginally up -- were only marginally up in the third quarter year-on-year and down quarter-to-quarter despite the new customer wins. What is the reason for this? How have the orders developed in North America?

[Jukka Kainulainen, executive]

I can comment on this revenue, so like we communicated that more than doubled, grew 127% in first 9 months. And this is, of course, good measurement period so 3 months is quite a short period. And especially been looking last year with the lower revenues, lower volumes, revenue is not that equal between the quarters. So that's why the 1 quarter measurement is too short for that.

[Tomi Ristimäki, executive]

And one point is actually that we have actually had in our press releases before that the full launch of the new product family will be in U.S. happening in Q4. And there could be more this kind of still look at globally that it's everything is completed, but we have the launches of the new product family action in US in Q4. It's now delivering. It's now.

[Paula Savonen, executive]

It's now.

[Tomi Ristimäki, executive]

It's now.

[Paula Savonen, executive]

Yes.

[Tomi Ristimäki, executive]

Yes. Exactly.

[Paula Savonen, executive]

Yes.

[Tomi Ristimäki, executive]

So we don't see it yet that effect and I think that brings us again more competitive position in there.

[Paula Savonen, executive]

Thanks. Then there is a question about the number of employees, the headcount. The number of employees has increased during the 2024, while the turnover has declined by 20%. When do you expect the personnel costs to decrease?

[Jukka Kainulainen, executive]

Yes. So when we take the measurement point from quarter 2, so personnel costs already have reduced and continue also, of course, in quarter 4. And when you look this -- what we communicated about 90 people reduction compared in the quarter 2 level, which is 907. So you don't see the full impact yet in our quarter 3 books. So when we report the quarter 4 number, you'll see the remaining reduction in our headcount to be visible.

[Tomi Ristimäki, executive]

And it was kind of obvious to also make the investment in personnel. If you look at the inventory level personnel, that matches the early year guidance. That, that was the plan and that we were executing the plan and now when the market is slower, we are taking it back and we are doing it actually very fast.

[Paula Savonen, executive]

Yes. Next question is about the sales guidance for 2024. The midpoint of your sales guidance for 2024 points at a sales decline of 21%, while you have 36% more employees versus 1 year ago. The gross margin is holding up very well, but you seem to have far too high costs. Is the plan to wait until market demand recovers? Or do you plan to slash the costs on top of the now finalized cost cutting program?

[Jukka Kainulainen, executive]

Yes. So like I commented, part of the people reductions will be visible in quarter 4.

[Tomi Ristimäki, executive]

And it will be visible in results in Q4 because this is actually the time line that you don't see actually the savings in Q3 numbers yet.

[Jukka Kainulainen, executive]

Yes. And then of course, another thing is that it's not only people related savings we do. It's also the restricting the external spending overall on whole group, which is also one important factor in our cost savings, what we are doing at the moment.

[Paula Savonen, executive]

Thanks, Jukka. And Tomi. Then about the growth on different continents. So from which continents do you expect the best growth in the future?

[Tomi Ristimäki, executive]

I think what is happening now, we see and percentage wise, of course, the North America was higher, and that's actually the market studies is showing the same. And Europe is actually we look at also the EV registrations, which is now very uneven in different countries. We have double digit growth in several countries. People in Finland look at the number. Finland is actually the lowest performing in the electric vehicle sales. That's the biggest minus in Europe.

And then, of course, the mentality in Finland gets that it's the same everywhere. But we had double-digit growth comparing, for example, Denmark, where the registration in first half grew by 50%. And we had double-digit growth in the U.K, we have this in France.

So this is actually something that is very different in different countries today. And overall, the electric vehicles are keeping the proportion of the new car sales. And in first half, we showed a, let's say, slight increase even on this. So I think when we look at the market demand, and we have also communicated on the fact that in most of the countries, with Finland again as an exception, we have very good charging network compared to the amount of electric vehicles. This is not the same.

So there is kind of we have been talking about this investment debt that there is too little charging bit already for the existing cars. And this is quite harsh reliability for electric vehicle users in certain countries, but the number is bad. So this is actually the investments are coming only from this. If there wouldn't be any electric vehicle sales, you would still need more networks. And we see that the amount of electric vehicles is growing all the time, so you need that actually even more.

[Paula Savonen, executive]

The next question then is actually about the installations. And the installations are growing, but your sales are not growing.

[Tomi Ristimäki, executive]

Yes.

[Paula Savonen, executive]

So is Kempower losing market share?

[Tomi Ristimäki, executive]

No, it's the same thing. I think this is the same situation for every manufacturer today because like I said, the inventory it's not inventory sitting in Kempower and it's not sales inventory at the customer, it's waiting for installation. So this actually means that this growing number of installation, the products are coming from the warehouse waiting for installation. And that needs to move on certain customers to actually be able to make new orders.

Nobody will order, if you have, let's say, high quantity of products still not installed still not making money. So this is actually the point that it's not warehouse which is sitting in Lahti at Kempower in Durham. This is actually all over the Europe, all over our customer base is where you look at the situation.

And most of this is actually already dedicated to a site. But this is kind of the delay in the installation period and this is delays on the utilities giving grid connections and the combination on permitting. This is kind of that has not changed, but the amount of installations needed has grown so much that this utility side cannot keep up. They have been growing. We can see it on the figures 18% more means that they are actually making it better and better all the time, but this kind of needs to go out before the real growth happens.

[Paula Savonen, executive]

Yes. We have time for maybe 1 or 2 questions. Let's take 2 questions and then we close. What actions have been done to improve the visibility of the stocks in the pipeline and sales prospects of the distributors to avoid such surprises as what's seen as we saw in early 2024?

[Jukka Kainulainen, executive]

Yes. So if you mean -- if the question is about our customer stock, so we have full visibility to our cloud system, charts are on our customer inventory. So we see on daily basis what's the inventory level, how much is commissioned and how much is un-commissioned chargers over there.

[Paula Savonen, executive]

Thanks, Jukka. And then let's take the last question about the customer interface and customer side and why they would choose a different vendor over Kempower. So what reasons or feedback have customers shared when they choose a different vendor over us?

[Tomi Ristimäki, executive]

I think in all the cases, maybe the distributed large system is not the right choice for every market, every location, and there could be a better choice maybe having this legacy as stand alone products as well. So it is a suitability for the sites. That's one. Of course, price has an issue. Sometimes, if it's a really heavy pricing, we are still in the premium products.

So willingness to go really in very, very low is not really something that we do. And it is the points of what is suitable, what is the relationship, if it's a long qualification period with the customer, if the other supplier is already in, you come in, -- your delivery orders will come later. So this is also time aspect in here.

[Paula Savonen, executive]

But then I just want to ask, when the customer chooses us and you could choose 3 different factors?

[Tomi Ristimäki, executive]

I would say the main point and where we -- and the understanding that the distributor system, when we have a certain grid connection, it's the higher amount of transactions, higher amount of sale of electricity. So that's the main argument with the distributor charging system that you can provide. And in when you look at the commercial vehicle side, the main idea is to deliver kilowatts, most efficient way. Especially for passes, this is not actually that you can do more performance with less power, which means lower investment as total. Even the cost of the goods is not relevant, it's the outcome.

So these are the 2 aspects from that point of view. And I think it's kind of going for the modern charging system is like a scalable solution, more future proof than the legacy standalone idea that you can grow the networks and you can grow the systems after the installation and naturally do this.

[Paula Savonen, executive]

And easily update?

[Tomi Ristimäki, executive]

Yes, this is the idea.

[Paula Savonen, executive]

Thank you. Thank you for very many questions and active discussion. And like we did after the last quarter report, we will publish questions-and-answers on our investor website, within a few weeks or within a week. Let's see how we can handle the questions.

And before we close the line, we go to the city of Kaunas in Lithuania, where our customer, Eleport, has recently opened the largest charging hub in the Baltic countries. Check it out, and thank you all.