Nordic Semiconductor ASA

OSE:NOD

Earnings Call Transcript 2021-Q1

[Svenn-Tore Larsen]

Welcome to Nordic Semiconductor's quarterly presentation for first quarter of 2021. Pleasure to have you all listening in today. So we see a continued strong growth in revenue during very challenging times. And the important thing is that we see solid demand in all of our end-user markets. Our revenue came in at $143.2 million, it's up 104% year-on-year, and it's up 13% quarter-on-quarter, even though it's been, as we usually say, Chinese New Year in Q1 is usually a weaker quarter, but I think it's been going full steam all over Asia in production during this quarter. Our gross margin ended at 50.2%, which was in the guided area we did earlier on. And for the first time, Bluetooth revenue passed $100 million. It actually came in at $119.8 million, it's up 134%. Our proprietary revenue keep running at a stable rate around $20.9 million, indicates a growth of 36% year-on-year. On the cellular IoT, it grew only 10%, and it was really heavily influenced by supply issues. So all over, it was a healthy quarter for Nordic. It required a lot of working with our end customers, and we do much more follow-up now with our end customers to ensure we don't get any production stops at lines. It's important when there is shortage that we were close with all customers. And we will continue doing this over the next quarters to try to avoid any line stops or any -- at least minimize impact for our customers. Our backlog keeps increasing. We ended with a backlog of $803 million, it's 551% up year-on-year. It's mainly driven by increased volume from Tier 1 customer, but we still see that the broad market is also growing strongly. The Bluetooth and multi-protocol solutions accounted for 88% of this revenue. When you go back and look at $803 million, you will compare it with the guidance we're going to give today, that is $140 million to $150 million for Q2. You see it's a matter of getting wafers available that's basically sort of constrained the growth in our numbers. But what we see is that we have a very good support from our vendors. TSMC is working hard to pull in wafers. And we just need to balance, so we minimize any damage for our customers. I said Tier 1 customers drive growth. And we've been taking this slide a couple of quarters now because the platform companies defining the features. And I think that what you see now is the bottom end of this slide, where customers are connecting to this infrastructure. And we are leveraging very strong on the work we've done with this huge, what we call, tail end customer base over so many years. We've also seen during these last quarters, a shift in Healthcare segment, where more and more of health care device providers are going from analog to digital solutions. We will discuss this a bit in the presentation also. We have a steady market share on certifications. We ended this quarter with 42% market share. But what we have seen changed over the last year, 1.5 years, is a significant increase in value for each design. That's really what our backlog represent. It's going to $803 million with actually the numbers are less than it was last year, and we see it's an effect of corona. But as the value per design is higher, obviously, the market share is in actual revenue-wise getting up. And we see strong growth across all our verticals. Consumer Electronics remains the largest area. As a Healthcare, building retail show the highest growth. And there is disruption, I will say, in asset tracking, smart home, smart lighting and also drug delivery and disease monitoring is growing. As we have talked about for many, many years, very strong. New product launches. I used to take this slide every quarter. And it represents some of these products that we can talk about that's public. So gaming has had a very big uptake during this period, the last year. And obviously, Nordic is supporting most of the gaming accessories. And this is an example, it's a gaming mouse using the 52840. AppSens, the smart heart sensors, it's an ECG heart monitor using our parts. React Mobile is a cool product. It combines users of cellular and Bluetooth. It's a panic button for hotel employees. So if you go on the floor and you see a red button somewhere, it could be the React Mobile product. And we also have a company here, which is doing battery power IoT fire door sensors, and I said battery powered. This product can guard these fire doors based on battery power. Most of these alarms are connected to main. Here, you have a product that is battery powered, using LTE and connecting globally to any base station. And then we also have another design we show this quarter, it's asset tracker with GPS using our 9160. There is a strong design activity on the 9160. And we all know what design activity means for future revenue. We continue to develop products, new products. And the latest generation which we actually moved into volume production in Q4 is the 53 family. The 53 family is the most advanced Bluetooth on the market. And it's a dual core controller into the product. And we already see now 6 different module partners have made 17 different modules based on our 5340. It's really good to see such an uptake on a new product so fast. We received the first $1 million or it was $1.2 million from a customer within advanced wearables segment. We got orders from other customers within hearing aid and it obviously has support for artificial intelligence and machine learning, which I'll come back to a bit later. So a bit later. Artificial intelligence and machine learning is really the future of IoT. We've known that for a long time. That's why we've been working very closely with a company called Etch Impulse to make it available on wireless IoT chips. And this product combination of Edge software and Nordic radio is the first wireless IoT chip that has machine learning, artificial intelligence. They actually, in Slovenia, already, we've seen a company making power grid controller and monitor using both 9160 and the 52811 implementing machine learning. So we are very excited with Irnas product. Regarding cellular IoT. We continued to expand certification for global coverage. We just got approved by Brazilian regulation. We were certified by TELUS in Canada. And unfortunately, we now had, during this quarter, seen delay in supply chain, but we are picking up in the second quarter. What we also are doing through last quarter is to even simplify over tool and application more. And we see now that we are absolute easy to use for customers. We see more and more nontypical, noncellular customers implementing cellular into their product because it's easy and possible. So by this, I would like to hand over to Pål. He is doing the financials. Come back to you.

[Pal Elstad, CFO & Executive VP of Finance]

Thank you, Svenn-Tore. Before I start with the financials, a reminder, if you have questions to the Q&A after the presentation, you can go -- there's a link on the Nordic pages to the webcast, and you can answer questions. I'll start with revenue. The accelerating growth rates we saw during last year and also compared to last quarters continued also in 2021. The growth of 104% comes, of course, as a result of a very low Q1 last year, where Q1 was impacted both of Chinese New Year and the pandemic that started in March. So we actually had only 2 months of revenue in Q1 2021 -- 2020. This was not the case in 2021. We have very little impact of Chinese New Year. And we also, due to constraints also in Q4 in the supply chain, we had an increased demand in Q1. Also, the seasonal effects that we normally see, normally in Q1 is lower than the high Q2 and Q3. The shift in customer mix, the shift in product mix is more or less reducing this seasonal impact that we have seen historically. Bluetooth revenue increased, as Svenn-Tore mentioned, 134% to $119.8 million. This is actually the first quarter we're above $100 million in Bluetooth revenue. Proprietary continues the strong demand that we saw last quarter. Of course, this is an effect of the high demand for home office products now in the pandemic. Going forward, there will be a transition to Bluetooth on the proprietary products. So we do see a pretty stable, slight decline on proprietary going forward. Cellular IoT, plus 10% to $1.2 million, slightly lower or lower than expected due to supply issues, as Svenn-Tore mentioned. I'll now go to the main markets. We report on as overall revenue shows a very strong growth both compared to last year, but also last quarter. The underlying markets will, of course, show a strong growth. I'll highlight a few of the key observations we have. First of all, Consumer Electronics, up more than 100% compared to last year. Of course, Consumer Electronics is the area where we have most of the home office products and the proprietary business. But there's also other interesting designs there. Amongst others, gaming is showing really good demand in this period. Compared to last quarter, we have a slight decline of 5%. This is the only really seasonal area we have in the business. Wearables continues to be very strong. This is the area where we have very high demand, especially from Chinese vendors where they really want their high-end nRF52 products. Building & Retail together with Healthcare is the highest growth areas. Building & Retail grew by 169% to $35 million. The increase reflects continued growth for both industrial and home automation applications such as speakers, smart lighting, alarm systems, smoke detectors, for example. But other important products in this area is trackers, sensors and city bikes and also smart labeling. Healthcare, a very, very interesting area, where revenue grew by 197% compared to last year to $16.3 million, up more than 50% versus last quarter. In Healthcare, we have a stable base of customers that we've had for many years giving good basis revenue. But in addition, we have the transition happening during the pandemic, where we see more and more connected health care products and also more and more COVID-related products. Svenn-Tore mentioned a very interesting COVID product earlier in the presentation. Healthcare will be a little bit lumpy. But as we mentioned, this will be a very interesting growth area for Nordic. Gross margins at 50.2% this quarter, down from 52.7% last year. This reduction in gross margin was commented on in the Q4 presentation. And this is really driven by a change in both customer mix, but also product mix. Some of these Healthcare products, amongst others, are more on the low functionality, low-value products with lower gross margins. We expect this development to continue in Q2 and therefore see gross margins in the 50% to 51% range also in Q2. For the long term, this will also continue. And we've mentioned the gross margin of 48% to 50% for the short-range business. For the long-range business, margins are around 35% to 40%. I'll now turn to the operating model. The number on this slide reflects reported numbers. I'll come back to cash operating expenses later. So the effects of capitalization and internally developed R&D is included in the numbers. The strength in Nordics model can be seen on this slide, where the strong revenue growth gives us a significantly increased EBITDA compared to last year. Total reported R&D spending is now at 22.6%, down from 27% a year ago. However, we've now included the Wi-Fi development in the model. And so this quarter, we spent $2.1 million on development of the Wi-Fi portfolio. So excluding the Wi-Fi development, if we compare to last year, R&D spending is now at 21%. And we've commented before that, R&D needs to be at least 20% going forward. So although R&D spending is reduced compared to revenue in absolute numbers, total R&D increased from close to $19 million to $32 million. So we continue to invest to capture the larger growth opportunities that we see. SG&A now at around 9%, significantly down in percent of revenue compared to last year. However, we have increased spending by around $2 million. Although activity in SG&A is still low due to the pandemic and no traveling, no exhibitions, et cetera. Total EBITDA at $24.9 million or 17.4% of revenue. Cash operating expenses, which is OpEx excluding capitalized and total developed R&D and equity compensation increased 42% compared to last year. Compared to last quarter, cash OpEx increased by 17%. Increase in salary expense of 49% comes as a result of adding 29% people. So we are now 1,029 employees. This, of course, includes the 81 people that we added from Imagination at the end of Q4. Excluding the Imagination acquisition, overall, we increased employees by 19%. So salary spending increased by 49% compared to last year. Of course, this is significantly higher than the 29% more employees. The reason for this high increase is partly FX. A year ago, the mock was exceptionally weak. So we added the negative effect of FX was $2.2 million in the quarter. In addition, last year, we had very low profit. And of course, bonus accruals, et cetera, increased during Q1 this year. On other OpEx, the increase is from $9.4 million to $11.7 million this year. EBITDA margins in Q1 2021 was a strong 17.4%, up from 7.5% a year ago. If we compare to last quarter, we had a decline from 21.1%. This decline comes with an effect of lower gross margins, but also the higher spending, mainly due to FX and acquired businesses. However, excluding the long-range business but also excluding the Wi-Fi business, EBITDA margins is at 25.7%. For the last 12 months, for the first time, we're now above 20% on the total business and then close to 28% for only the short-range business. CapEx of $5.4 million in the quarter or 3.8% of revenue. Most of the spending relates to increasing test capacity, so that we have flexibility when we get wafers into the production and can quickly turn around products to our customers. We will continue to invest in test capacity. So we do expect CapEx to be in the same level going forward in percentage of revenue. Finally, I'll talk about cash flow. We do have a strong cash position. Although total cash outflow in the quarter was $46 million and negative operating cash flow of $26.7 million. The main reason for this negative cash outflow, which we have despite EBITDA -- or cash EBITDA of $23 million is we do see an increase in net working capital. This increase in the net working capital is mainly related to accounts receivables driven by timing of when revenue happens in the quarter, but also timing of when our largest customers actually have their annual closes. Most of these receivables have been paid in early Q2. So net working capital in percentage of revenue is at 27%, which is up compared to the 19.4% we had at the end of 2020. In addition, the other item on the slide is payments related to the option exercise that happened during Q1. As I'd like to sum up, the cash position of $197 million at the end of Q1 gives us a strong fundamental to continue to invest and capture the growth opportunities we have. The cash balance is now 1.9% with last month's R&D spending. Okay, Svenn-Tore, it's your turn to take over and give an outlook of the business.

[Svenn-Tore Larsen]

Thank you. So this slide, we also showed previously, but I think it's important to look at the end of this slide and see the steep growth we have the last 12 months. It's really due to the fact that we have this widespread IoT adoption. Finally, we see that all the products we've been working and all the customers we're working on are now putting products into the market, and we're going to see more new products entering the market throughout the next few quarters. And it's representative -- represented in our backlog. So it's a long-lasting journey at Nordic, and we are still at the early times when it comes to IoT implementation. We saw accelerated growth in Bluetooth. And short range, if you look at the last 12 months, 5 -- you see Nordic has grown 64%. But if you look at the 5-year CAGR for Bluetooth has been 28%, proprietary has been positive despite that we thought that proprietary might sort of be less to come. But now we see that there still is new products coming out with proprietary solution. If you look at the total group, we have been having a total CAGR of 20% over the last 5 years. And if you look at external analysts, I mean, ABI says that I think that Bluetooth IoT market will quadruple by 2024. And I believe that smart home which something Nordic been working extremely much in, will exceed 800 million devices. So obviously, some of the bets or calculated bets that Nordic take seems to play out just as we speak. And if you look at cellular IoT, this is a slide from ERICSSON white paper. It shows the cellular network. And if you look into the shaded area in the middle, that's really narrowband IoT, LTE-M. These are the numbers representative the 2 standards that Nordic is supporting in our products, our cellular products. So this is expected to grow strong according to ERICSSON. And that's just 1 reference we found. You will find more references that represent more or less the same trend, maybe not always the same number. But the trend is a heavy growing, fast and rapid growing segment and Nordic are in the middle of this growth. Also last quarter, if you remember, I presented Sigma's and ERICSSON ARDESCO reference design. And obviously, that reference design is using Nordic cellular products due to the fact that we have lowest power, ease of use and are very, very solid protocols. I also think that IoT will play an important role to reach UN sustainability goals. If you look at each box here, you see Nordic ticks -- use of Nordic into products ticks basically every box. And we see that now huge activity to reach the sustainability goals accelerated the signs with Nordic products. Also, we did in Capital Markets Day, soon, 2 years ago, the backlog really supports the $1 billion goal that we set. We are in a solid position. We are a market leader in Bluetooth. We are taking more and more design in cellular IoT, and we are complementing portfolio of Wi-Fi products. So we really see that due to the great work we are doing, call valuation with TSMC and other wafer suppliers, we work every day to try to minimize the damage for our customers due to supply chain problems, but also to optimize throughput from our suppliers. And we have to empty that backlog. And as we said in the report, it is stretching into '22. But still there is plenty of revenue to be shipped within '21. And that's really the reason with tight cooperation with TSMC that made us able to pull in wafers for Q2 delivery. The important thing is that it's pulled in, it's not additional wafers yet. But we obviously hope to see continuous pulling and some ease in supply chain as we go further throughout the year and into next year. Because it is supply that limit our revenue at the moment, we have still a support or minimum 25% in production volumes. And when I speak to TSMC, I'm very pleased to see their eagerness to correct the situation and their plans of CapEx spending over the next years to ensure capacity growth for all nodes and also going to do additional volumes on mature nodes, which over of our 52 family is running on. So this is a matter of a temporary situation where we have to work and laser focus together with our customers to create, as I said, minimum impact for them and come back much stronger when capacity eases. We have guidance for Q2 in the range of $140 million to $150 million revenue, although gross margin will be the same as this quarter. And we just need to keep on focus on all of our customers to ensure that we are making this shortage as little impact as possible for that production. That's really the challenge for Q2. Any questions? You can send it in. Stale will read them out.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Yes. We have got some questions, and we will split them up in different topics. So let's start with the backlog. Christoffer from DNB, "While the backlog is increasing in duration, are you still able to confirm that this is a real demand which will materialize in revenues going forward? Or can it be some elements of double booking from customers trying to get you to give them supply?"

[Svenn-Tore Larsen]

I mean we've been speaking about new customers. We've been speaking of new projects entering into production. We've been talking about higher value per design. And this backlog is representing those 3 pillars. Higher volumes, and that's really a real backlog, which we will be able to ship. We don't just now know the exact timing. But we have to balance, so the customers get the products in the market.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Christoffer is continuing on backlog. "Furthermore, can you help us understand what segments and type of applications are driving the backlog growth? And what's the customer -- what is the customer concentration in the backlog now?"

[Svenn-Tore Larsen]

I think as the next few quarters, progress, you will see new products in the market and understand where the backlog comes from. We can't comment on the backlog yet. It has to be product in the market, and you need to know what's inside the product.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you. Then we have a question from Petter Kongslie from Sparebank 1 Markets, "Very strong backlog. How should we view this with regards to length on the backlog?"

[Svenn-Tore Larsen]

It's stretching into 2022, and I think I responded to most of it in Christoffer's question.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Then we have a question from Johannes Ries, "Given the exploding backlog, do you expect to reach the USD 1 billion target earlier?"

[Svenn-Tore Larsen]

I would say, if there was no supply chain issues, we will say, yes. And I also think that due to the fact that we are going to get additional capacity from our vendors sooner. So yes is the answer.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you. Then we have a question from Rob Sanders, Deutsche Bank. "Can you break out the backlog between working from home categories and those that are unrelated to that theme?"

[Svenn-Tore Larsen]

We don't split on that parameter. But obviously, working from home is mainly on proprietary. So most of the backlog is for new products, and it's not related to working from home.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

And Rob Sanders has a follow-up question related to the orders. "In the -- is there a binding commitment on these orders with penalties? Or can customer easily cancel if they can find products elsewhere?"

[Svenn-Tore Larsen]

First, you can't find product elsewhere because there is a lot of software on top of each of these radio designs. And secondly, there is a generic shortage in the market. So it's not that you can go to vendor C, D, E, F and acquire radios that can replace the Nordic radio. So the work is on Nordic to ensure that these customer get the minimum of what they need to continue on entering the market.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you. We have a question from Christoffer, D&B, regarding revenue. "When it comes to the current growth rate, is that still being driven by new design wins with new Tier 1 customers? Or is there an element of tailwind from COVID-19 effects, such as work from home?"

[Svenn-Tore Larsen]

New customers, new projects and larger volume behind each customer.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you. Then we go over to the topic cellular. Petter Kongslie, Sparebank 1 Markets. "What is -- what issues in specific did you see in cellular?"

[Svenn-Tore Larsen]

Lack of wafers. So we didn't manage to turn wafers into modules during Q1.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you. Johannes Ries, "Will mobile IoT accelerate in second half?"

[Svenn-Tore Larsen]

Yes. We will see meaningful revenue on LTE models in the second half of this year.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Then we have a question regarding cellular from Petter Kongslie. Previously -- this is for you, Pål. "Previously, you have talked about 40% gross margin for cellular. Today, you talked about 35% to 40%. What has changed? And how does it impact the economics on EBITDA margins?"

[Pal Elstad, CFO & Executive VP of Finance]

I think it's changed. So the long-term targets on cellular IoT is still gross margins of 40%. But in the ramp period, just like with most Bluetooth products, gross margins are lower in the beginning. So the long-term target for cellular IoT is still 40% gross margins.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you. Then we have a question regarding Wi-Fi from Christoffer DNB. "On the Wi-Fi business, can you please help us understand what are your priorities for the next 12 months? And what kind of milestones you are aiming to achieve in this frame -- time frame? What kind of operational steps do you go through when you integrate a technology team like this?"

[Svenn-Tore Larsen]

I think there has been 2 plans from Nordic. One is to go straight to a leading Wi-Fi product, by Wi-Fi 6 product. We've been discussing a lot with existing Bluetooth customer base to see what they need. And based on this discussion, we're actually going to accelerate time to market with a product. And we are not going to disclose the strategy today. I would like to disclose the strategy when we have a Capital Markets Day a little bit later this year. But we are in some accelerated time to market with a product.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you. Then we have a question from Petter Kongslie regarding OpEx. "Can you break down the OpEx increase from fourth quarter '20? How much is FX? How much is the M&A cost? And how much is recurring OpEx?"

[Pal Elstad, CFO & Executive VP of Finance]

Yes. So compared to last quarter, the FX isn't as large as compared to Q1 last year, but around $1.23 million is the effect of FX compared to last quarter. And then the top spending on the Wi-Fi business, the acquired business, was $2.1 million. Then we had some effects related to bonuses, et cetera, that didn't happen last year. So -- but the rest is recurring business going forward. And then remember, we've always commented, that R&D needs to be at least 20% of revenue, and that's where we are now.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you. Then we have a question from Øystein Lodgaard from ABG on wafers. "Could you give some flavor on how you think the wafer situation is going to develop into 2022?"

[Svenn-Tore Larsen]

I think I keep that imposing that look at what TSMC is communicating to the market. We are totally dependent on TSMC putting new capacity in place. We're working closely with them. And we will update you on each quarter on the progress.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you. Then we have...

[Svenn-Tore Larsen]

I don't -- as you saw though from our guidance, we do expect some pull-ins in Q2. So it's better today than we stood here at last quarter's presentation. So they are clever and brilliant, and we just have to hope that they're also going to expand capacity sooner than what's been communicated.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you very much. Then I think we should -- we have a question from [ Lars Kjellberg ]. "Should we expect lower revenue in Q3 or Q4 compared to Q2 since you shifted some wafer volumes forward? Does it affect gross margin?"

[Svenn-Tore Larsen]

It should not affect gross margin. And logically, we will see that first half and second half will, according to the policy we have now with TSMC, pull-in policy, be affected.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Then we have a question to Pål here from Petter Kongslie. "Cash to R&D at 1.9x, which is below the threshold of 2x. Why did accounts receivables increase? And can you provide any color on how we should think about working capital?"

[Pal Elstad, CFO & Executive VP of Finance]

Yes. So first, the CapEx or the cash to R&D of 2 is just a target. So 1.9 is more or less that target. Accounts receivable increased, as I mentioned, partly because timing of exactly when shipping is done in the quarter. But more importantly, one of our big customers has year-end closing just in the shift of the March to April. End of Q4, net working capital was 19.4%, it's now 27%. I have been talking about a long-term, not a target, but a long-term number of around 30%, mainly because we do see longer payment terms, and we also see the need to have higher inventory to sort of be ready for situations like this, but also to build up inventory for cellular revenue when that will materialize more. So I think that's -- yes.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Then we have a question from [indiscernible]. "Margin development is indicating low pricing power on Nordic products. Does this represent a risk balance of year?"

[Svenn-Tore Larsen]

It does not represent weakness at all. It represents that we are going into high-volume customers. And the higher the volume is to more attractive margin the customer gets. And as we now see, the revenue contains more Tier 1 customers with higher volume. It is just happening what we have said, the margin will stabilize around 50%.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you very much. And then we have the 2 last questions. The first one here now comes from Rob Sanders, Deutsche Bank. "There appear to be emerging low-cost competitors in China like Tailing and Expressive. Do you see them as becoming relevant in China?"

[Svenn-Tore Larsen]

What we see in China is actually 2 things. Yes, there is a growing base of customer doing very, very simple Bluetooth-connected products. Nordic is not competing in this arena. But we also see more advanced product where feature-rich products and that's where we see we get a stronger foothold. So yes, it will impact the low-end market, but we are not making products for ultra-low connectivity only applications.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you. Then we have the last question from Petter Kongslie. "Last quarter, you gave some comments on revenue on second half versus first half. Has this changed with the newest information you have on the component shortage situation?"

[Svenn-Tore Larsen]

I think we answered that on our previous question. So obviously, as we get pulled in from coming quarters and not get any additional wafers, it will sort of even out the quarters.

[Stale Ytterdal, Senior Vice President of IR & Strategic Sales]

Thank you very much. That was all the questions for today.

[Svenn-Tore Larsen]

Thank you. Thank you for listening in. I'm looking forward to talking to each of you that we have individual calls with later on during the next 2 weeks. Thanks.

[Pal Elstad, CFO & Executive VP of Finance]

Thank you.