Thales SA

PAR:HO

Earnings Call Transcript 2019-Q1

[Operator]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Thales Q1 2019 Order Intake and Sales Results Conference Call.[Operator Instructions] I must advise you that this conference is being recorded today.I would now like to hand the conference over to Mr. Bertrand Delcaire, Head of Investor Relations.

[Bertrand Delcaire, Head of Investor Relations & VP]

Yes. Hi. Good morning. Welcome and thank you for joining us for the presentation of Thales' Q1 2019 order intake and sales.I'm Bertrand Delcaire, the Head of Investor Relations at Thales. With me today is Pascal Bouchiat, CFO of Thales.This presentation is audio webcast live on our website at thalesgroup.com, where the slides and press release are also available for download. A replay of the call will be available as from tomorrow morning.With that, I'd like to turn over the call to Pascal Bouchiat.

[Pascal Bouchiat]

Thank you, Bertrand. And good morning, everyone.Before moving on to the number, as usual, I wanted to highlight a few recent events. I'm now on Slide 2.First, of course, and as planned, we completed the acquisition of Gemalto at the end of March. The post-closing acceptance period expired 2 weeks ago, and we now own 97% of Gemalto's shares. The corresponding cash out amounted to EUR 4.62 billion. As a reminder, Gemalto is consolidated as of April 1 and will be reported in a new operating segment called Digital Identity and Security, DIS. This operating segment will also include a few digital assets that [ we're concerning ] from Defence & Security. In appendix, you can find more details on the sales and EBIT of these activities. We are now focusing on the successful integration of Gemalto and, of course, on the delivering of synergies.Second, I wanted to stress how we continued to see a pickup in defense markets. As you will see later, putting aside a jumbo order we booked in Q1 last year, Defence & Security order intake was up 44% in Q1. This large increase was driven by the booking of 3 more defense orders, bringing the total to no less than 11 in the past 12 months and 24 in the past 2 years, a -- levels that we have not seen at least in the last 10 years. Finally, let me mention that earlier this month, Moody's affirmed our A2 rating, removing the negative outlook it had taken upon the announcement of the Gemalto acquisition. In Q4 last year, S&P have already removed its CreditWatch and affirm its A- rating. In this decision, Moody's stressed that it believes that "the Gemalto acquisition make good strategic sense and was not overly complex."Turning now to Slide 3, which summarizes our key figures for the first quarter: new orders amounting to EUR 2.27 billion, down by 25% on a reported basis. This drop is in line with our expectations since it is due to the fact that, in Q1 last year, we booked a jumbo order for more than EUR 800 million, the so-called OneSKY project which is a pretty unique contract modernizing the old Australian air traffic management system, both civil and military, which handles over 11% of the world airspace. Sales amounted to EUR 3.36 billion, 1.5% below last year. As you will see in a minute, this drop is simply explained by high comparisons basis in our 3 operating segments.Looking into details at our order intake, I'm now on Slide 4.The chart on the right is pretty explicit. The drop in order intake is simply driven by the booking in Q1 last year of this jumbo order, the OneSKY contract in Australia, for EUR 855 million. Putting this contract aside, order intake grew by 4% and remained solid in all contract value categories. In particular, in the quarter, we booked 3 large orders with a unit value above EUR 100 million, all 3 in defense. The base of smaller orders grew as well both below EUR 10 million and below EUR 100 million.Turning now to Slide 5, looking at sales growth.In Q1 2019, the currency impact is a small positive of EUR 37 million, which is partly offset by the scope impact mostly relating to the deconsolidation of the general-purpose HSM business. Let me remind you that we have deconsolidated this business since the 1st of January 2019 while we worked to finalize its disposal. You can find in the appendix the details of its 2018 sales and EBIT. Putting aside these currency and scope impacts, Q1 sales were organically down 2%. As you can see on the chart on the right, this drop was driven by high comps, with Q1 organic sales growth significantly above full year growth in both 2017 and 2018.Now looking briefly at each segment one by one. I'm now on Slide 6.In aerospace, orders were down compared with Q1 2018 at EUR 672 million, against EUR 751 million in Q1 2018. The main explanation for this drop is that Q1 2018, including significant contract in IFE and training and simulation, which was not the case in Q1 2019. Space orders were up, but Q1 is not really material in this business.Sales were organically down 6.5% against high comps in Q1 2018. This decline was in particular due to the slowdown in the commercial satellite market that is affecting our Space business after several particularly strong years. Space sales were up more than 30% in Q1 2017 and 1% Q1 2018. Let me stress that, at this point, the recovery of the commercial satellite market is slower than expected, which will weigh on our Aerospace sales growth in the coming quarters. In consequence, we now expect Space sales to be down 5% to 10% over the full year 2019.The other businesses in the segment recorded solid growth, with the exception of military avionics.Now moving on to Slide 7 with Transport. Transport orders returned to a more normal level after a particularly robust Q1 2018 that had benefited from 2 significant contracts in Poland and Norway. And surprisingly, sales growth slowed down after the exceptional performance of 2018. Let me point out that we expect this high basis of comparisons, combined with phasing effects, to weight on Q2 growth in this segment.Turning now to Slide 8, looking at the Defence & Security segment. Defence & Security orders amounted to EUR 1.33 billion, down 25% year-on-year. As already mentioned, putting aside the OneSKY contract, order intake was actually up 44% on the back of 3 large orders. Sales were stable organically, impacted by the strong growth recorded in the first quarter of last year. Looking at the coming quarters, we expect that the solid momentum we see in defense market will support strong Defence & Security sales growth over the full year, especially in H2 when the comps are easier.So all of that's bringing me to Slide 9, which is just a reminder of our financial objectives.All in all, Q1 is in line with our expectations, which naturally leads us to confirm our financial objective for 2019. The current targets are based on our February 2019 scope, i.e., before the consolidations of Gemalto and the disposal of the general-purpose HSM business. On June 13, we'll provide an updated 2019 guidance including these 2 scope changes.So this concludes my brisk presentations. Many thanks for your attention, and I will now be pleased to take your questions.

[Operator]

[Operator Instructions] The first question comes from the line of Christian Laughlin from Bernstein.

[Christian A. Laughlin, Analyst]

Just 2 quick questions from me, please. The first is if you could just provide a little bit more detail about the particular growth drivers that you see in defense and Space coming into effect in H2. What are the sub areas of the business that will be driving stronger growth in that half? And then secondly, I realize it's early days, but I was just wondering if you had any further comments on Gemalto with respect to, now that you've had more complete access to the firm, anything, surprises positive or negative around financial performance or operating performance.

[Pascal Bouchiat]

Okay, Christian. So on Defence & Security, I wouldn't be able to mention any specific, I will say, subsegments that is especially buoyant. I would, I will say that we see a solid growth in most of those markets. Naval is a quite good example where we see quite a strong growth. But I'm just mentioning naval, but I could mention the same on, for instance, air defense missions, which is also a good example. Our overall security business, secured communications are also doing quite well. So overall, I mean, it's really a broad-based, positive growth in Defence & Security business. So cybersecurity is also doing quite well. So overall I mean not the specific segments but clearly a broad-based growth that is coming from most of our segments, business.So on Gemalto, yes. I mean, as you know and as I mentioned, we now own 97% of Gemalto shares. And we are starting to work with our new colleagues at Gemalto. Probably a bit too early to guide you for what it means in term of top line growth and bottom line for 2019. As I mentioned, we'll come back to you on this specific item on June 13, so to provide you, I mean, our revised guidance including how we see, I mean, Gemalto. Overall, not specific negative at this point that I should mention to you. Maybe probably -- Christian, I mean, your question is even a bit broader. What I can do now is to provide you with quite a quick update on Q1 at Gemalto, as Gemalto will no longer release their figures as an independent company. You will not get, I mean, Q1 figures from Gemalto's management, so let me take this opportunity to give you a bit of input with regard to Q1 at Gemalto. So overall, sales at Gemalto from an organic standpoint was slightly down in Q1 2019, as compared to Q1 2018, minus 1%, but here again, I mean, reflecting quite different our sales growth. On one side, the traditional smart card and insurance, which embeds both the SIM card and the banking and payment business, overall this business was down, and it's not a surprise, driven by the drop in the removable SIM market. All deals aside, it's true that we see the banking and payments business growing organically something like 3.5%, so quite positive; and concerning that the drop in inventories that appeared in 2017 and the beginning of 2018 is now completed, this drop in inventories in the U.S. On the other side, we see the -- I will say, some more high-growth segments, which is the I2C, identity, Internet of Things and cyber, which is growing quite quickly. I mean between 6% and 7% in Q1 [ 2018 ], as compared to [ 2018 ]. So overall I mean a trend which is in line with our expectations. Clearly, the decision from Gemalto management, which we fully support, to exit some low margin in the SIM business and particularly in China -- we keep seeing, I mean, pressure on prices. On the other side, the banking and payment business is doing well. And overall, the I2C business is also continuing to grow. So overall, pretty much in line with our expectations, but this is also where we'll be able to update you in June.

[Operator]

The next question is from the line of Romain Gourvil from Bank of America.

[Romain Gourvil, Associate]

I've got two, please. So first, on Space, we're now looking at a minus 5%, 10% decline. And I think it was flattish growth before, you guided to. And this could have an impact of around 1% on your full year growth, but you reiterated your guidance, so any area that is expected to do better? Or does this means that we are now closer to the lower end of your target range? And second is on HSM. So margin -- I know you divested it, but margin looks impressive at around 30%, so I was wondering if this was a kind of top-end margin target that we should think about for some, not all obviously, of your digital security businesses when you guys have reached sufficient scales.

[Pascal Bouchiat]

Okay, Romain. So -- and so yes, by decisions, the fact that we do reconfirm our full year objectives while -- and state it's true that, and you know, we are guiding for some kind of stability in term of top line growth in this business [indiscernible]. It is true that, of course, this will be offset by stronger growth in other businesses. I guess that you understood that that was quite positive and overall, our Defence & Security business. This is probably where we could find, I mean, a way for us to compensate for this drop in our Space business, okay. So on HSM, so yes. I mean margin of this general-purpose HSM business is quite impressive. I mean this is a -- as you have seen, this is a small-sized business, but quite a profitable one. I don't want to expand or to guide you on the overall security business at Thales in term of margin because it is made up of various kind of subsegments. So of course, I mean, in this type of segments, I mean, the level of margin can vary quite a lot between more traditional kind of security business; and these very specific, I will say, high-grade kind of cybersecurity businesses.

[Operator]

The next question is from the line of Olivier Brochet from Crédit Suisse.

[Olivier Brochet, Research Analyst]

Pascal, I would like to continue on Space to try and understand a bit better what explains the change in view for commercial. Is it GEO? Is it LEO, or is it a combination of the two? And we'd like to get your thoughts about what would happen in 2020. That's the first part of my question. The second part is I suppose it's included in the guidance because you didn't change it for EBIT, but should we expect restructuring in Space in 2019 as a result of this change in views?

[Pascal Bouchiat]

Yes. Olivier, so in term of a specific business for Space, it's really, I mean, the commercial telco business that is suffering and which keeps suffering, I would say. And as you know, I mean, one key reason behind that is the development of new kind of technologies. And it's true that today, I mean, various satellite operators today are running competitions, running bids in order to find, I mean, what should be, I mean, the best technology for their own needs. As you know, I mean, we have seen the emergence of -- on top of the traditional geostationary satellites, we have seen in the recent past the development of various, I will say, the -- offers. One is the high-capability or high-speed, high-throughput satellites which are called the highs HTS -- or the HTS, very high-throughput satellites. What we also see today, and it is a bit new, is the development of small-size highly flexible geostationary satellites. And it's not a secret that some European satellite operators are today running competitions on this front. So it's not a questions of GEO, LEO. It's overall the fact that the market as it is, is today quite low, with most of those satellite operators, I mean, looking at which kind of technologies they need to go in. And at this point in time, it's really too early to say, I mean, to anticipate what would be the outcome of those competition but which -- of course, it's important for our business with regard 2020. And if your question about 2020 is how do we see, I mean, our level of sales in our Space business in 2020, it's really too early. It's really too early because, of course, it will depend upon the outcome of what is going to happen in 2019 in term of order intake, with various ongoing competitions as we speak. Just to remind you, that this segment is a significant one, yes, but representing today 30% of our global Space business. But it's true that I will say, it is totally -- a bit frozen. And I would like to say it's not just a Space Thales issue. It's really a market issue, with, in my view, our competitors facing the same type of difficulty today. Now I mean, this civil telco business, we know it was already the case in the past, was -- can be cyclical. And it's true that today we're on the -- obviously in the low part of this cycle. Now in the midterms, the need to replace existing satellites will become more and more obvious in the next quarters.Your last question was about restructuring. Yes. I mean we need to face and -- we need to phase our staffing in our Space businesses -- in our Space business, which means that we'll need to adjust our workforce in line with our level of order intakes and level of activity, which means that there will be significant restructuring charges that will be booked in 2019 in this business. In the beginning of 2019, when we released our 2018 figures, I mentioned that in 2018 our level of restructuring was especially low. My recollection was that it was EUR 150 million. And at that time, I mentioned that we were anticipating a level of restructuring in 2019 that would be more in line with EUR 100 million. This is what we confirm. It can be even slightly up or above this level, but I guess this is today quite a good [indiscernible]; and just reflecting, I mean, the situations in our Space business where we need -- we clearly need to adjust level of headcount in line with the level of business that we have in this business today.

[Operator]

The next question is from the line of Celine Fornaro from UBS.

[Celine Fornaro, Head of EMEA Industrials Research]

Two questions, if I may. The first one will be regarding actually the Transport division, if I can just focus on that one, where we have clearly relatively -- you can say this is due to high comps, et cetera, but a low order intake. And also, in terms of the sales growth, it is relatively subdued, so I just wanted to see what's the outlook for that division for the next quarters. What are we expecting? But also in terms of rebuilding the pipeline for 2020 as well; and in terms of the Transport division, how you are performing in term of delivering highly priced contracts compared to the older provisioned 0-margin contracts. And then my second question would be referring to your comments about defense could help offsetting some of the lower organic growth, negative organic growth in Space, while actually when you compare the profitability of the 2 divisions, I mean, it's not only -- one is [ to topple off ] the other one. So does that also help in terms of the EBIT, for your EBIT guidance around 2019?

[Pascal Bouchiat]

So on Transport, yes, you probably have in mind that in 2018 our level of growth in this segment was particularly high, in excess of 15%. And it was that it provides a quite high comparisons base for 2019, in particular in Q2 and Q3 from this -- it won't be the same in Q4, but it's true that in Q2, I mean, the reference base is quite high. So this has to be taken into account. Not specific concern in term of level of demand in this business, in term of opportunities. I mean in Transport, I mean, Celine, I keep saying that, I mean, our key challenge is to execute on our projects, more than, I mean, chasing with these commercial opportunities. The market is pretty solid. There are various opportunities, but it's true that we are cautious from a commercial standpoint on this business to avoid, I mean, repeating, I mean, the type of difficulties that this business had in the past. I have to say that I have not captured, I mean, your question about defense margin.

[Celine Fornaro, Head of EMEA Industrials Research]

Well, you're saying that the growth offsetting as you keep your full year outlook 3% to 4% unchanged and that is going to offset some of the Space weakness. I mean the 2 divisions clearly -- the 2 businesses clearly don't have the same level of margin.

[Pascal Bouchiat]

Yes.

[Celine Fornaro, Head of EMEA Industrials Research]

So higher growth in defense means much more in terms...

[Pascal Bouchiat]

Yes. No, you're absolutely right. In -- when I look at, I mean, 2018, overall our Defence & Security business level of EBIT was a bit in excess of 12%, while the Aerospace business was around 10%. If I take 2019, I mean, the gap between the two will be -- I would say, is much wider. It's true that Aerospace -- level of EBIT margin in 2019 for Aerospace business will be below what it was in 2018 due to our -- I mean the -- what I explained with regard to our Space business. And of course, the level of restructuring, that will be quite high in this segment. On the other side, if I take Defence & Security, I would say, in 2019, a combination of quite strong top line growth. Today, I mean a level of project executions which is rather good. And because of these overall situations and in particular the strong level of growth that we enjoy in this business, we expect almost no restructuring charges in this business in 2019. So I would say that all planets will be fully aligned. I mean this is how we see today 2019 for Defence & Security. And because of that, it's true that there will be in 2019 a gap in term of EBIT margin between the Aerospace business and the Defence & Security business. This is how it will be in 2019. Once again, because of these very specific situations in our Space business as we see it today.

[Operator]

The next question is from the line of Christophe Menard from Kepler Cheuvreux.

[Christophe Menard, Head of Aerospace and Defense Sector]

If I could follow up on what you just said on defense. Last year, fiscal year 2018, you are already at a record-level margin in defense above your mid-term guidance. From the comments you've just made, I get the understanding that you could go even higher than this level in fiscal year '19, so can you comment around this? And also still on defense, can you comment on the momentum that you -- between mature markets and emerging markets? I saw that, well, the emerging market order intake is up 3% in the quarter. I know it's only a quarter, but how -- what momentum are you seeing on the emerging markets? Is it recovering, especially in defense? Any comment will be useful actually on [indiscernible].

[Pascal Bouchiat]

Okay. So -- Christophe. So with regard defense, yes, by decisions and taking into account what I've just mentioned, it's true that we could expect our Defence & Security EBIT margin in 2019 to be even higher than what it was in 2018. As I mentioned, all planets fully aligned: strong top line growth, pretty good project executions, our competitiveness drivers running full speed, almost no restructuring. So this is pretty much some kind of ideal situation. Now can we say that I mean, these situations will be sustainable? I mean -- of course, I mean question mark. I don't want to guide you in the long terms that the level of margins that we could enjoy in 2019 in the business will be sustained at this level. Once again, it's -- I mean all drivers run in full speeds in the positive side, but we need, of course, to be cautious. And you probably have in mind what we said when we released our 2018 figures on defense. We said now, I mean, our challenge is to keep this type of margin for the midterm. I mean demonstrating that we can really sustain this type of margin, more than getting even higher level of margin.On, I mean, the dynamics with regard emerging markets, what we said and what I would like to reconfirm, what we said a few months ago was that, after -- year 2018, which was a bit below our expectations, we see, I mean, various opportunities to grow our order intake in emerging markets in 2019. We had the first example, by the way, in Q1 with, I mean, this new large-size project that we booked with regard India. As you also know and because we've already discussed that, but it's true that we are pursuing various opportunities in the Middle East as well. Now where it always difficult is to really anticipate when will we be able to finalize, I mean, those various opportunities. And this is where -- particularly in emerging countries, where I mean the level of visibility to say that opportunities materialize in actual order intake, this is where we always need to be a bit cautious because, I mean, it always take more time. It's always a bit more uncertain to move from opportunity to contract awards in those countries, hence the fact that I'm a bit cautious on this point, but it's true that we have been working and we are working on various opportunities in emerging markets, all of that underpinning. I mean the fact that we expect our order intake to emerging countries to grow substantially, as compared to 2018.

[Operator]

The next question is from the line of Zafar Khan from Societe Generale.

[Zafar Khan, Equity Analyst]

You mentioned military avionics and saying everything was firm except that, so just wondered if you could give us a little update on what's happening within that segment. And secondly, just wanted to ask about the Gemalto due diligence now that you have control. I know the management, the existing management team, is running Gemalto. How much access will you have to their books? And how deep due diligence will you be allowed to undertake in that business now that you have control?

[Pascal Bouchiat]

Zafar. So on military avionics. I mean I would say it's a mix of various project. I don't want to be that precise of to pinpoint any specific matters. It's not -- by the way, it's not a large-size segment for us, but here you might have, I mean, project turning, coming to an end. So overall, no specific concern about military avionics for us. On Gemalto, I mean, of course, we have today, I mean, of course, a full access to Gemalto. As you know, the new Digital Identity and Security segment is run by the management team which is comprised of managers coming from Gemalto but also managers coming from Thales. And the -- for instance, I mean, the new CFO of this new segment is a Thales manager. I mean the same for the Head of Legal and for the Head of Strategy. It's also true that when you look at the various business lines within Gemalto, in this newer segment there will be 5 business lines. 4 of them will be driven by Gemalto managers who know, I mean, this market quite well. 1 of the 5 business lines will be managed by Thales managers. So you see, I mean, it's really, I mean, a mixed management team made up of both Gemalto and Thales manager. And we believe that it will -- it will make sense. So of course, I mean, we have a full access to Gemalto books. And I mean no specific concern, I mean, surprises that have emerged from our various discussions and in-depth discussions with the Gemalto team, no. Nothing specific to report to you on this front.

[Zafar Khan, Equity Analyst]

Well, that's very reassuring.

[Operator]

The next question is from the line of Harry Breach from MainFirst.

[Harry William Freeman Breach, Research Analyst]

Can I just ask a couple of simple ones? Firstly, I think recently Australian Naval Group finalized the attack-class submarine contract. I'm just wondering if you can give us an update on when equipment selection decisions might get made, your current expectation. My next question was just trying to thinking a little more on Gemalto. And I know it's only 1 quarter, Pascal, so we shouldn't get carried away, but if I'm right in my reading of Gemalto's 2018 results, the business that contains the SIM cards and banking was just over half of revenues. And you said it was down, but then the I2C part did grow by 6% to 7%, so can we infer from that, that the SIM card and banking business was down by a similar 6% to 7% in the first quarter but that you still see it growing by, I think you said, 3.5% for the full year? And then maybe just last question really: I know that, earlier on, you touched on, for Christophe, sort of the emerging market sales dynamics. I'm just wondering if you can talk a little bit about your sales pipeline more in developed markets there and how you're feeling about that pipeline.

[Pascal Bouchiat]

Okay, Harry. So first, on the submarine contract in Australia, you're absolutely right. I mean, in Q1, Naval Group has finalized its contract with the Australian MOD, which is a great news for Naval Group and for Thales as a shareholder of Naval Group. Now in -- you know that Naval Group was awarded, I mean, the responsibility of the platform, it is a platform system integrators. And as you know, I mean, Lockheed Martin was awarded the CSI contract, combat system integrators contract. And today, I mean, Lockheed Martin, together with the Australian MOD, is, I will say, is driving bids in order for the selections of the company that will supply, in particular, the overall acoustic suite and also the overall communications suite that will be part of this new generation of submarines. And as you know, I mean, Thales is really, of course, part of these competitions. It would be for us quite a large-size project; still today a bit too early to say when the Commonwealth will make final decisions in term of selecting, I mean, the company that will be supplying this type of equipments. But I mean, of course, I mean, this is for us quite a large-size opportunity on which we are working quite hard.On Gemalto, maybe I was not that clear, so I probably need to come back a bit more on what I said. My comment was about Q1 2019 as compared to Q1 2018. And what I said was that overall, in term of organic, top line growth in Q1 2019 was negative by approximately 1%. And this is reflecting a level of drop in the traditional smart card and insurance business which is between 6% and 7%; and on the other side, on the fast-growing business, the identity, IoT and cybersecurity, a level of top line growth which is between also 6% and 7%. And I mean the combination of the two ending up with a slight negative organic growth for Gemalto in Q1. Now what I also said is that on the first segment, the smart card and insurance business, which is made up of 2 subsegments, on one side we have seen the banking and payment business growing organically between 3.5% and 4% overall but just, I mean, on the SIM segment a continuous drop in term of sales. And this is reflecting 2 things: first, the decisions that we fully support from the Gemalto management team to exit some markets, in particular, China, where the level of margin is quite low; and also, second thing, overall, I mean, the continuous drop in pricing that we see, and so removable SIM segment, which is of no surprise to us. All of that has been pretty much in line with our expectations.

[Harry William Freeman Breach, Research Analyst]

And the developed markets sales pipeline...

[Pascal Bouchiat]

Yes, your question is about, yes, I mean, the overall dynamics in developed markets. So overall, I mean, we see today a level of demand in most of our developed market which is rather good. I mean no change on this front, as compared to what we shared with you when we published our 2018 figures. So overall, I mean, many opportunities in many, many developed countries, maybe with the exceptions of level of uncertainty today still prevailing in U.K. for obvious reasons. But putting aside U.K., overall I mean a level of demand which is rather good, with various opportunities that I don't want to comment, of course, but overall giving us probably a good level of comfort on the level of order intake in this Defence & Security business in the next quarters to come.

[Operator]

Thank you. I would like to turn the call over to the speakers for any additional or closing remarks.

[Pascal Bouchiat]

Okay. So no additional questions, so let me conclude this call by stressing that, as you understood, this Q line -- is in line with our expectations. And we remain focused on the delivery of our financial objectives; of course, execution of our strategy; and as from now, the generation of synergies with Gemalto.Our next events will be our assembly general meeting on May 15 in Paris; and then our 2019 updated outlook on June 13; and of course, the following week, with the Paris Air Show, where we are all looking forward to seeing many of you in person.So thank you very much for your attention, your participation and your questions. And have a good day and bye-bye.Thank you.

[Bertrand Delcaire, Head of Investor Relations & VP]

Bye-bye...

[Operator]

Thank you.Ladies and gentlemen, if you didn't have a chance to ask your question on today's call, please do not hesitate to send your question to Thales Group investor relations at [e-mail], and we will get back to you as soon as possible. Thank you all for your participation. You may now disconnect.