Sitowise Group Oyj

OMXH:SITOWS

Earnings Call Transcript 2023-Q3

[Mari Reponen, executive]

Welcome to Sitowise Q3 results presentation. My name is Mari Reponen, and I'm Head of Investor Relations here in Sitowise. I have here with me our CEO, Heikki Haasmaa; and our CFO, Hanna Masala, who will shortly start the presentation. Here is our agenda for today. And as you can see, Heikki and Hanna will first discuss our Q3 performance and then our January-September development. After that, Heikki will go through our outlook and how we are progressing in strategy execution. [Operator Instructions] And now we continue to the presentation, and I will hand over the stage to Heikki and Hanna.

[Heikki Haasmaa, executive]

Thank you. Thank you, Mari, and welcome all on my behalf as well. We had a mixed performance in our business areas during the quarter. Let's start by looking at what went well. Firstly, 2 of our business areas, Infra and Digital Solutions continued their strong growth. On a year-to-date basis, they are also above their targeted profitability levels that we indicated in our Capital Markets Day in June. As the market environment has some weaknesses in these business areas also, this means that we have continued to outperform the market. So I'm very pleased with this performance. Secondly, our action is to ensure our future competitiveness and performance in buildings have progressed well. I will come back to this later on. And thirdly, our cost control and pricing activities have been successful in mitigating the effects of inflation. During the quarter, we also benefited from lower voluntary addition rates and lower sickness absences. But we also had some challenges during the quarter. So firstly, we had the market headwinds. The continued market decline, especially in buildings had an impact on our third quarter net sales growth and was one of the 2 key reasons behind our full year guidance revision to expect. Secondly, integrations and other internal matters took more bandwidth than expected in Sweden. This led to a decline in sales focus at the same time when the market was also a bit softening. I'll go through the development in Sweden in detail later in this presentation, but already at this stage, I want to underline that for the main part of the business in Sweden, we are doing well, and we are confident that we can overcome also the challenges faced in third quarter by refocusing our actions in the future. So the headwinds mentioned weakened our third quarter performance, as you can see from these figures. Our net sales growth was down by 1% year-on-year. In addition to the weak performances in Buildings and Sweden, net sales growth was slowed down by the negative calendar effect. Kroner Euro exchange rate had an adverse impact to as new sales would have grown by 1% in constant currency exchange rates. Organic growth, which is adjusted both for the currency and number of working days increased 1% year-on-year in third quarter. Lower sales and earlier mentioned challenges had an impact on our adjusted EBITDA, which came down to EUR 3.5 million and EUR 7.6 million in margin. We'll get back to this also later on. The general economic environment is visible also in our order book that came down 5% during the quarter. However, the order book is still in a good level in each business area. Let's then have a look at each business area more closely, starting with buildings. So buildings continued to suffer from the very difficult construction market and also negative calendar effect and its net sales declined by 13% from the comparison period. During the quarter, our focus in buildings was on 2 things. Firstly, on adapting business operations to the existing market situation; and secondly, on ensuring solid growth platform for Buildings future growth. In third quarter, we continued to adjust our capacity through different vacation arrangements and also limited temporary layoffs. The effective management of work helped us to keep utilization rate on a good level. We also continued to focus heavily on the cost and pricing. And actually, I'm really satisfied that the average prices developed well despite increasing price pressure. Since we have prioritized long-term profitability instead of entering to toughest price competition. We still have a good order book in buildings and new orders are coming in basically from all business segments under Buildings business area. Of course, then the weakness in the construction industry continues to impact our business and outlook for the coming quarters. However, we believe that we are now better positioned to seek for the growth and performance and expect to see some positive impact already in the fourth quarter. We initiated the change negotiations in buildings in the beginning of August, and those were completed in early October. I still want to recap what were the objectives for the negotiations. So securing conditions for the future growth, having more agile ways of working, developing national cooperation and also improving performance. And following these degotiations, now a new leaner organization that supports also efficient project and client work was introduced. We reduced the number of employees by close to 80 people. And in addition to that also approximately 10 voluntary levers left during the process. The one-off costs related to these changes will be roughly between EUR 1 million, EUR 1.5 million, and they will be recorded in items affecting the comparability in fourth quarter. The savings will be visible from the fourth quarter onwards and fully from January '24 onwards. When estimating the impacts of the personnel reductions in '24 cost base and comparing those to this year, it's also worth keeping in mind that we had temporary layoffs of some 20, 30 employees ongoing in buildings for most of the part during this year. Then following the new organization in buildings, we will increasingly focus on services with higher margin such as special services, energy efficiency planning and other services related to energy as well as security critical services, which continue to grow. We also aim to broaden our client base and service offering to improve the resilience of our buildings business further. The areas we are looking at included, such as commercial and logistics buildings, automation and also now increasing in the smart services, new kind of digital services. Then with the new organization and also under [indiscernible], new leadership, we continue to develop cooperation between local offices. And I'm now really happy to share also that -- so Timo will start to lead this building business overly in the mid-November. And as a final point on the buildings, we continue to improve performance with the group-wide initiatives related to new sales culture, innovation culture, pricing excellence, utilization rate and also cost containment. Let's move on to Infra business then. So as I already said, Infra clearly outperformed the market again and grew by 9% year-on-year. I'm very pleased with this performance. And almost all of this growth is organic. The market environment also in the infra continues to be mixed. There's a very strong demand for energy and environmental projects related to green transition and then also the security-related demand is growing. However, weaker demand is seen in projects related to municipal infrastructure design and also groundworks for new buildings. This is closely related to the construction market downturn. There are several factors impacting Infra's grade performance, but ultimate risk access is really based on the work done during the past years. So we have close client relationships. Our market position is strong, and they are really really really good experts working with high-driven dedication. Year-on-year, we have also succeeded in pricing. In utilization rate, we saw a small drop during the quarter, but that was more -- that was really much related to more time spent on sales. So that's good for the future. Order book is at a good level. And as a whole, we see a good and stable outlook for the Infra business. And we are also looking forward to the outcome of the effects of the new Finnish government program. Then Digital Solutions. So net sales in the Digital Solutions continued to grow rapidly by 23% year-on-year. The growth was entirely organic. There was a significant contribution from the Pitcoms Leafpoint product rollout. The growth was supported by the good development overall with the SaaS product sales, successful pricing and also the utilization rate, which was at a good level. During the quarter, we also saw increasing number of offers for our digital solution is offering together with infra or buildings. And this is showing that how we are further developing and improving also our top line synergies from our different business areas. As earlier mentioned, the market was also a bit softening in third quarter in Digital Solutions. We see that the macroeconomic situation in Finland is impacting our private sector clients who have got their investment budgets. There is, on the other hand, one exception to this trend, and that is renewable energy sector where the demand continues to grow rapidly. The public sector also continues to invest well in digital solutions. Outlook is overall still good, and our SaaS business continues to grow well. And it is good to note, however, that Digi's growth rate is expected to slow down to a more challenging market environment and completion of the Leafpoint rollout. And as the last business area, then we'll deep dive to Sweden. Firstly, the Krona euro exchange rate continued to impact heavily our reported net sales figures. So in Kronas, our net sales increased by 7% year-on-year. But when we bought it in euros, it declined by 4%. The top line was also impacted by the negative calendar effect and also the slight softening of the market. The latter was visible, especially as a slower start and lower utilization after summer. However, the market remains still reasonably good. Local infra market is growing fast, and there is good demand in commercial, industrial and also institutional building projects. On the other hand, the local housing market is very weak. But [indiscernible] Sweden is not so exposed to that weakest market segment. Order book was slightly down in third quarter, but still on a good level. And in third quarter, the integrations of companies acquired in '22 and some other internal matters took more bandwidth than expected in Sweden. I'll come back to this one in the next slide. But before that, some short comments about the outlook for Sweden. So firstly, we expect the market to remain mixed but overall good. And yes, we have analyzed the reasons behind the third quarter weaknesses and are confident that our corrective actions will take us back on track and have a good action plan for that one. So let's run through where we are in Sweden. Firstly, in the past 4 years, we've done 8 acquisitions and built a company with industry-leading expertise in selected segments. This is a very good achievement. And our team in Sweden has been doing a good job in serving our clients and also creating and promoting the Sitowise brand. Secondly, the benefit from the larger scale we have focused on efficiencies by gradually integrating our systems and ways of working in Sweden. During the third quarter, in addition to the softening market, we had a couple of internal challenges, which burdened the performance. So firstly, time spent on these integrations has been higher than expected. Secondly, there was also one problematic project dating back to 2020, which has taken a lot of management time and resources. Thirdly, there has been some delays in the key recruitments. And as the fourth item, there has been quite a lot of focus on the internal activities at the cost of sales. But how do we then move on? So we aim to get back to the targeted growth and performance track in Sweden by turning the focus back on sales and client work. So concretely, this means high focus on pricing, growing market segments and also building a more proactive sales culture. We also pay attention to the project performance. The challenging project, what I just mentioned earlier, will be finalized by the end of the year. And thirdly, we deprioritized some internal activities. So the integrations of the 3 companies acquired in '22 were finalized in third quarter. And now we also postponed the implementation of some noncritical development projects in Sweden to release time for the #1 basically here.Let's then have a look at the whole group's performance. Firstly, I'd like to highlight how our business area mix has been developing during the last year. So as you can see, both in the net sales and also in the share of the FTEs, both Infra and Digi has been increasing quite a lot, while building has declined clearly. And this is also the trend what we expect to continue in the near future as well Net sales. So just recapping, net sales was down by 1%, but up by 1% in constant currencies. The net sales for growth was driven by Infra and Digi. However, then the growth was adversely impacted by the negative calendar effect, weakening of the krona, the continued weak market in buildings and then time taken by internal integrations and some challenges in Sweden. Organic growth, which is adjusted for the calendar effect and currency impact was 1%. And good to mention still that when we exclude the Buildings business from the organic growth, our growth would have been 9%, which is actually really good overall.The group's order book declined by 5%, both from the end of June and from the comparison period. In Digital Solutions, the order book increased in Infra and Sweden order books, so minor declines and in building order book was down a bit more. But all in all, as I said, we are in a good position. Our order book remains at a good level. I'd like to share a couple of great wins from the quarter. So the first example is from the infra business area where we signed a significant framework agreement with the French company Neon regarding environmental surveys and permit process management for renewable energy projects, such as wind farms and also solar energy projects. Digi has had a service contract with Neon already for several years for digital services. And in practice, this cooperation now expands also to our infra team. The second example relates to Digital Solutions, where we did a service agreement with the Swedish sewer Company at [indiscernible] on using our GIS, or geographic information system, data management platform in solar from exploration and development. Digi is also participating in the Neon framework agreement signed by Infra set. But great wins, both. And now I'd like to hand over to Hanna.

[Hanna Masala, executive]

Thanks, Heikki. Let's start with this familiar slide where we present 3 key components when analyzing our technical consulting business. So the first graph here shows our headcount and FTE development, and that's obviously our capacity to grow and serve our clients. Even if the graph of this employee shows quite flat development, there is quite a lot happening between the business areas, as you saw already on the page presented by Heikki. If we compare Q3 with the situation a year ago, FTE number was down by roughly 100 in buildings, while other BAs were growing with a clearly largest increase in infra. The second graph here in the middle shows the sicckness absences, which play a key role in the picture as those reduced the available capacity. Our sickness absences were slightly down from the comparison level, which had roughly EUR 300,000 positive EBITDA impact compared to the previous year. And then the third graph shows the utilization rate, which tells our ability to build the available hours. In Q3, the utilization rate declined slightly from the previous quarter, and this comes from Sweden from this internal focus, as Heikki mentioned, from Infro so, where it was more time on sales and tenders and from the buildings where the market had some impact and then the change negotiations took some time away from the work. We are obviously not satisfied with the adjusted EBITDA margin of 7.6% for the quarter as it's clearly below our targeted level. The biggest reason for the profitability decline is the market-driven weak performance in buildings. There, both the growth and profitability have taken hard hits, and we've been managing this with temporary layoffs and other efficiency measures. The second factor impacting the profitability was the weaker-than-expected performance in Sweden that was just discussed. When we compare the salary increases, when we compare with the last year's third quarter, the salary increases from the collective bargaining agreements have also impacted us. The personnel costs were up by almost 4%, while our FTE amount was up by 1%. This gap indicates the upwards pressure from the salary inflation. As we have mentioned also earlier, we are mitigating this increase by focusing on pricing and our cost efficiency measures. For example, we continue to cut underutilized premises and constantly work on streamlining IT purchases and so on. And then the last item, which also was mentioned by Heikki in the quarter was this one working day less than the previous year, which is hitting our top line and bottom line. And the same difference in the working days will also appear in Q4.. Our cash flow from operating activities decreased to minus EUR 2.7 million in the quarter, while a year ago, it was slightly positive. The biggest reason for this decline is the change in working capital. Due to the seasonality, Q3 is typically having low cash flow. We have the holiday periods, meaning lower invoicing, but still the salaries and other costs are running normally. But then also, we had some timing effects of payables, some pension-related payments, which had been on a high level at the end of the Q2, and we're at a more normal level in Q3. So this was increasing the working capital during the quarter. Obviously, then the weaker profitability also caused the cash flow to decline. Our net debt amount increased from the end of June, and the leverage also increased being at the same level as the year earlier. Typically, our net debt and leverage decline towards the end of the year as Q4 is a period of high activity and invoicing in the business. Let's then look shortly at our performance year-to-date, so from January to September. Good to note that this is clearly better than the Q3 looking at isolation, thanks to the stronger first half of the year. In the first 9 months, we saw 8% net sales growth or 10% growth in constant currencies, and the organic growth was 3%. Our adjusted EBITDA margin was down year-on-year. The first 9 months performance, however, was clearly closer to the comparison period totaling 9.2%. Operating profit, on the other hand, improved clearly from last year, and it was EUR 11.4 million, thanks to lower items affecting comparability. Also, the operating cash flow was ahead of the comparison period for the 9 months totaling EUR 12.4 million, mainly thanks to the improved operating profit. And as I said in the previous page, the leverage was on the level -- on the same level as the comparison period. As just discussed over the previous slide, the January- September was clearly better than the Q3, and this can be seen especially in the operating profit, which increased 21% year-on-year and in the cash flow, which improved 31% from the comparison period. Then back to Hak. Yes. Thanks, Heikki.

[Heikki Haasmaa, executive]

Market outlook and guidance. So firstly, I still would like to repeat that the demand for our services is supported and continues to be supported by the megatrends urbanization, renovation backlog, digitalization, climate change and also security increasingly. Then, of course, there are still uncertainties in the market, which may continue to impact our clients' short-term decision-making. Outlook for the fourth quarter, especially for buildings continues to be challenging. In Infra, Digi and Sweden, we see both areas of stronger and weaker demand. But overall, the economic outlooks in both in Finland and Sweden look quite okay, but there's some slowdown in the growth. There are also other factors impacting the rest of the year, such as we are going live soon with the ERP and CRM. Of course, the continuous inflation, calendar effect, currency exchange rate and then also the higher interest rates. Overall, then looking at the guidance. So we revised that 2 weeks ago, and we are saying that Sitowise Group estimates that its net sales in euros will increase compared to last year and that our adjusted EBITDA margin for the whole year '23 will be below year-to-date adjusted EBITDA margin of 9.2%, but above 8%. Then -- so this was a financial part, but then it's also good to show how we are progressing with our strategy. First, as a reminder, so we have the following elements in our strategy. Our values, purpose and then the direction where we are going, our vision and the strategic pillars with the help we are also measuring how we are progressing overall. And then we have strategic focus areas. Today, we'll go through how we have been progressing with these strategic pillars. Let's start with the most innovative. We've already succeeded to build a solid pipeline of smart services and turn several ideas into productization and commercialization phase. So this has been well progressing. One example of those is our smart analytics offering for the Forest segment. So we are using satellite data and AI, artificial intelligence to provide insights of the changes in the forest. And this service provides significant value for our clients. In addition to this, we've already -- we have already 6 innovations for further development as part of our innovation competition. And going further, we continue to use data, analytics and also AI for new use cases and business opportunities to provide both, yes, new business but also like internal efficiencies, both are needed. The most sustainable. We've continued to develop both our existing sustainability tool, which is integrated to our Voema platform. And then also our own sustainability-related processes are progressing well towards our sustainability goals for '25. We also see a significant potential in providing sustainability services to our clients, and this has been well progressing. So we have already now announced a new internal organization to drive further development and sales in the high future growth and margin areas. And these include renewable energy, climate change mitigation, biodiversity, adaptation and then also circular economy. And we have clear targets for each one of these .And then the most efficient. So here, our objective is to develop a lean operating model that enables our experts to focus on client work. During the third quarter, we introduced a new sales organization, which has specific sales groups for the strategic sales growth areas such as sustainability services, renewable energy and also industrial clients. We also have established like a horizontal business area sales group that focuses on and also coordinates these smart services, which are then going to be offered in all business areas. And then we continue to define and implement the smartest place to work and develop key IT systems. And as mentioned, so ERP and CRM system go lives are planned to happen in the coming weeks. And for all of this, we have set clear goals and KPIs to monitor our progress. Just would like to also still remind that we have set also 2 key strategic KPIs for our strategy period. So the one being to double our sustainability services revenue. And then secondly, that our recurring revenue will be 10% of our annual revenue by the end of the strategy period. Then, of course, we have several metrics also for the strategy to ensure that we have our client support for us and how we are developing the customer layout. But now it's time for the questions.

[Mari Reponen, executive]

Yes, we have a couple of questions, and let's start with the market related. So the question goes, how is the pricing environment for you at the moment? And are you able to increase prices or prices coming down?

[Heikki Haasmaa, executive]

Yes. So of course, okay, yes, basically, in all of the markets, clearly, the pricing environment is like tough as there is some slowdown in all of the markets as just explained, and there is heavy, heavy price pressure. But as I said earlier today, so actually, we've had a really high focus over on the pricing of like focusing on all of the levers there, and we have been successful. So actually, our average prices have gone to the right direction.

[Mari Reponen, executive]

Okay. And then about the organic growth rate. It was 1% in Q3. So is that something you look forward also in Q4?

[Heikki Haasmaa, executive]

Yes. Again, as was said, so now the fourth quarter also from the -- like the mixed environment market environment continues to be clearly visible. So we then expect that probably same kind of like growth rates will be there as we shared. So in the Building segment, it has been -- or we've had a negative growth. But on the other hand, basically all the others also with the constant currencies have been growing. And of course, we want to maintain and further improve the growth organically.

[Hanna Masala, executive]

Yes, I could just complement that, obviously, we are not guiding the sales by quarter. We've said that this year, we expect the sales to be higher than last year. And then one thing which we take you also referred to was that in the DT, we've had like a lot of this Leafpoint product rollout impact, and that's sort of more or less done. So that's one kind of element in that. And of course, also in the year-end, there are typically some projects kind of completions and there could be a bit like in 1 year, you have more of those and is 1 year a bit less. So let's see.

[Mari Reponen, executive]

Then a specific question about buildings. So what kind of savings you are expecting from the layoffs.

[Heikki Haasmaa, executive]

Yes. So we are not disclosing the exact savings. But as was said, so there are now layoffs of close to 80 people. And then, of course, it's good to just remember that, of course, already like this year, we've had already all the time basically like from 20 to 30 people absences due to this temporary layoffs and all kind of arrangements. So basically, from there, it can be then calculated.

[Hanna Masala, executive]

Yes. And also, I think it's, of course, unfortunate that these layers needed to be done, but good to remember that they also like response to the market decline. So it's not like this overhead reduction program like you can do in some companies, but here we are also losing top line with the people, but that's just kind of a fact that the market is not providing sufficient work, and that's why we took down the capacity. So it's not as straightforward as just to calculate the kind of like salary costs.

[Mari Reponen, executive]

And then a couple of questions about Sweden. So firstly, what kind of problems are you having there?

[Heikki Haasmaa, executive]

Yes. So as mentioned today...

[Mari Reponen, executive]

Sorry, a continuous question. When do you expect them to end?

[Heikki Haasmaa, executive]

Yes. So as we said today, so yes, quite a lot of time has been going for the integrations, but these integrations will be ended by the end of this year or actually, okay, they were already completed, but now by the end of the third quarter, but also all the things related to those funds will be then. So that's one thing. And then we had this one pretty big and troublesome project, which date back to 2020, but that will be also closed by the end of this year. And that's, of course, then helpful here.And then as we said, there have been some delays in these key recruitments. And of course, now we are working heavily with towns so that we get the FTE growth and then the sales naturally, which is a key part here overall. And then the fourth one was that we are also now deprioritizing some of the internal activities, just this kind of like development, which are not so time critical. So we will be postponing just to release time for the client and Salesberg.

[Mari Reponen, executive]

And considering the situation in Sweden, the market, as you said, is still fairly good one. And Sweden is a strategic growth area, but are you able to continue growth, especially with M&As in this situation?

[Heikki Haasmaa, executive]

Yes. Of course, Sweden stays as a high priority area for us, and we really want to get the growth from there also in the future. So as I just mentioned now, we had some internal challenges. The corrective actions are progressing. Of course, now we pay attention to those ones. But then when we also have been solving them, then of course, we are able to continue our journey.

[Mari Reponen, executive]

And a follow-up question on the key recruitments in Sweden. What's there really the issue? Is it about finding candidates or just other slowness in process?

[Heikki Haasmaa, executive]

Yes, a bit of slowness in the process. But of course, it is also, in general, relates to all what has been said that we've been also focusing on some other activities at the cost of the sales. So of course, now focusing on the sales side client work and then the FD growth will come as a result of that one as well.

[Mari Reponen, executive]

Okay. And then a question maybe to Hanna about the covenants in loans. What are they?

[Hanna Masala, executive]

We have not disclosed the covenant levels, but obviously confirmed again this quarter that we are comfortably within the covenant levels.

[Mari Reponen, executive]

Okay. And then a couple of questions about the European Serum Systems. So how big risks are really related to the implementation of those? And what kind of profitability improvements do you expect from these systems?

[Heikki Haasmaa, executive]

Do you want to...

[Hanna Masala, executive]

Yes, I can comment. Yes. Well, I think the risks are obviously related to the fact that now the people need to learn to use the new systems, we have trainings starting soon and there is, obviously, we have planned them to be done in the most efficient way we can, but there is a possibility that this is kind of somewhat impacting the utilization rate as people need to start like doing our bookings and creation of new projects and invoicing with new systems. And then obviously, always, these are big projects that impact basically all of the parts of the company, so we've done a lot of kind of preparations and testing and everything and are confident that it goes smoothly. But of course, like you can never 100% plan everything. But I think the biggest thing is that if there is a kind of a decline in the utilization rate. And when it comes to the benefits, obviously, you can't like expect that to happen in a week or in a month. But the longer term, we have, for example, the CRM system, which will be much more developed than the previous one. So this will be greatly supporting the sales efforts. We will have better ability to coordinate the client activities between the business areas. We'll be able to better plan the client work. When it comes then to the project work side, obviously, this will help us to automate some processes. And overall, we'll get modern systems to continue working from.

[Mari Reponen, executive]

Okay. Then a question about investments in innovation and smart services. Are you able to continue those? Or do you have to sort of prioritize there as well or downscale the plans?

[Heikki Haasmaa, executive]

No. Our plans for -- like overall, when it comes to our strategy, we continue to execute our strategy. And of course, we also will be investing in these like new opportunities and services and also some ways of like redefining the efficiency because we feel that that's also something at this also then paying off in the mid long term, so will continue. But of course, we want to be there also naturally selective and then we are really selecting only the ones which have like also what comes to the innovations, new services, the ones which have like a truly commercial potential, of course, it's not just looking at like 5 years, but also that they should be seeing them quite soon. I mean, the results of that.

[Hanna Masala, executive]

One element on that is also the kind of public funding. I think it's been great to see that now the new government in Finland, for example, is supporting the kind of R&D funding, and we already have some publicly funded projects and have a very good dialogue with, for example, Business Finland to sort of get an extra boost for this. So I think it's a good support for us as well.

[Mari Reponen, executive]

Okay. And then we have a question how happy are you with the acquisitions made in the past?

[Hanna Masala, executive]

Yes. Well, I can start commenting that, I think, of course, we've done in 10 years, we've done some 60 acquisitions. So obviously, I think there is a variety of some have gone -- have been sort of excellent, truly exceptionally good. And then always, you have some which were maybe not perfect. There were some hassle at some point. But I think overall, on the average, I think we have a very good practices and good focus in the acquisitions, on the integrations, and we can be very happy. I think sort of this company has in its G&A growth and also growth through M&A. So I think overall, I can say that we are very happy with what we've done.

[Mari Reponen, executive]

And as a final question, it's about the long-term targets. When do you expect to reach again your long-term top line target 10% annually and adjusted EBITDA margin target of 12%.

[Heikki Haasmaa, executive]

Yes. Firstly, of course, both remain here intact. And I fully believe that we have all the natural possibilities to achieve then, of course, maybe first starting from the EBITDA margin. So naturally, that's something that also in addition to, of course, all what we are doing today and executing our strategy and all the successes, what we have and the key drivers that we have for the profitability development, but still, of course, the market, especially the building construction market should be picking up. So that's pretty evident here. But then what comes to the growth. So we have -- as we have been today sharing also, we have several like areas of growth here, like we already know where we have the growing market segments, and we are fully focusing on those ones. So we believe that we can also get the necessary growth from there. And then, of course, okay, now in the short term, we, of course, want to now improve our leverage or like a balance sheet structure overall. But then in the midterm, naturally, the M&A will be and Hanna said it already, they are part of our DNA and will continue to be there. So of course, then we'll continue then as well.

[Mari Reponen, executive]

Thank you. And thank you, audience. This was all the questions for now. And we hope to see you again in connection of the full year results at the end of February. And now thank you, again, Hanna, and you all, and have a great day.