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Earnings Call Analysis
Summary
Q2-2023
PolyPeptide is navigating a transition year in 2023, undertaking aggressive expansion with the aim to become a large-scale CDMO. They've offset COVID-19 revenues, indicating strong core business growth, and advanced key partnerships, particularly in metabolics. The product pipeline has grown, with 31 phase III projects set to ensure mid-term growth. Increased customer demand is fueling CapEx expansion, funded by planned additional financing. The company has an operational improvement plan underway, though the first half saw a sharp profitability decline due to inventory write-offs and negative cost absorption. The second half of the year is focused on fulfilling customer demand, expecting higher revenue and EBITDA, and improving operational productivity, with profitability projected to recover as the scale-up continues.
Ladies and gentlemen, welcome to the PolyPeptide Group Audio Webcast and Conference Call. I am Alice, the Chorus Call operator.
[Operator Instructions]
And the conference is being recorded.
[Operator Instructions]
The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Michael Staheli, Head of Investor Relations and Corporate Communications at PolyPeptide Group. Please go ahead, sir.
Yes. Good morning, everybody. Thank you for joining our call on such short notice. We appreciate your interest in PolyPeptide. I'm joined by Juan-Jose Gonzalez, our new CEO; and Lalit Ahluwalia, our interim CFO. Lalit supports us with his deep experience in pharmaceutics and generics, in finance, until our new permanent CFO, is in place.
Juan Jose will give you a short overview, and then both are available to answer your questions. We planned this call to run for around 30 to 40 minutes, so please limit the number of your questions so that everybody has a chance to ask. Also note, please that we are still in the process of closing the books and then we will come back to you with the detailed H1 numbers and analysis as well as the updated guidance for 2023 on the 15th of August when we present the half year results. You will be able to ask your questions over the phone or in writing.
And with this, Juan Jose, please.
Thank you very much, Michael, and hello, everyone, and thank you for joining us this morning. My name is Juan Jose Gonzalez. I have been CEO of PolyPeptide for nearly 3 months. And I thought I could share with you why I joined the company, my initial impressions in terms of PolyPeptide, and then I will give you additional context in terms of the market update today.
Now I joined PolyPeptide because of a significant growth opportunity as the company because of the chance to transform PolyPeptide into a global large-scale CDMO company. And after 3 months working here, I'm convinced that, that is a clear possibility for us. The company has a very unique value proposition in the market. We are not just a pure peptide player, but we have a multisite infrastructure, and that allows us to have a much higher customer proximity than other players and also provide different solutions where they want pros to be manufactured in Europe where they want to have development sites across the U.S. and Europe and Asia, we have significant flexibility. We also have deep development expertise. And as the development products are becoming more and more complex, we are becoming the partner of choice for the development products.
And finally, I have worked for 30 years already. And I see a lot of companies that talks about customer focus and customer proximity. But at the end of the very few are -- and my experience working PolyPeptide that this organization has a very strong cultural values around customer focus like positiveness and flexibility. So these value propositions around multisite network with deep development expertise and a very strong customer focus is why Peptide is in a very strong position to win in the marketplace.
Now the company is experiencing growing pace. It's not dissimilar to the challenges any small company face when they embark in a very aggressive expansion. It's just a good reminder that the scaling up is not easy, but all the challenges are 100% under our control. We don't depend on the market. The market is growing very rapidly. We don't need more customer agreements. We already have them in place. This is all about making sure that we have everything in place to execute on our strategy.
Now in terms of the announcement, 2023 is going to be a transition year for the company. And there are 3 key messages. Number one, in terms of revenues. In the first half of 2023, we have been able to fully offset the COVID-19 pandemic revenues from last year. That basically means that our Core Peptide business is growing very rapidly. Now it's not just about our growth during this first half of the year. We have been able to advance our partnerships in key segments in the market, especially metabolics. Today, we are working with all the major players engaged in GLP-1, and that positions the company very well in the future.
Now we also have been able to advance our customer pipeline. At the end of last year, we had 220 projects. At the end of June, we have 226 in a very difficult economic environment. And of this 226, 31 are in phase III moving into commercialization. And this is a very important indicator that will ensure the midterm growth of the company.
Now it is on the back of this increased customer demand is on the back of these new partnerships that we are setting up that we are going to increase our CapEx expenditure this year. And more importantly, we are in advanced negotiations to secure additional financing and the financing is going to cover all of our working capital and future CapEx needs. It's very important to make sure that we position the company to maximize this growth opportunity.
Now the second key message is around our operations improvement plan. And this is something that our Chairman shared in the last call. We have a very clear plan with some very clear KPIs and milestones. This is around making sure that we have recruited the right profiles that we train them in the right way that they are deployed in an effective way that we have an optimal manufacturing planning process that we are meeting all of operations and quality need from our customers, and we continue to progress in this plan. These plans take time to come into effect, but we know exactly what we need to do, and I already start to see progress against this plan.
Now in addition to our operations improvement plan, we also have some key initiatives to improve the profitability of the company, especially around continuing to review our pricing with our key customers is still in more cost discipline in the company and also having a more focus on our working capital, especially around our inventory.
Now the third key messages around the profitability of the company. And we knew that the first half of the year was going to be the most difficult gearing in this transition as we are offsetting that revenue and the revenue with -- from COVID with our new customers. Now you are seeing a sharp decline. This perhaps the year compared with the first half of the year last year and around half of the decline, a bit more than half of the decline is driven by the inventory write-offs and by the negative cost absorption, and this negative cost absorption is driven by our inventory optimization plan. We actually have been able to reduce our inventory, working capital and by our inventory finished goods, and that is actually what is driving this negative cost absorption.
Now deal has -- is really driven by the scale-up of a company where scaling up new businesses to replace COVID, so you have a negative mix effect. As the COVID business was highly profitable, and we are still scaling up some of these new businesses. You have the investment in our infrastructure and cost base ahead of the acceleration in the second half of 2024 and you have the effect of depreciation. And these effects accounts for a large part of a dealer has in those [indiscernible] profitability. And then we have a lower operational productivity, which is more or less what we experienced in the second half of the year. And this lower productivity, we will start to see the improvements in the second half of this year and then into 2024.
So those are the 3 key messages. Very strong underlying revenue growth, a much richer pipeline at the company well positioned to fulfill all the opportunities as the market continues to grow very rapidly, for all this in terms of operations and still some work to do going forward. And then in terms of profitability, some of the key drivers of this profitability decline are one-off and as we move forward, as we scale up the company, then we're going to see our profitability starting to recover.
Our priorities for the second half are very clear. Our #1 priority is to fulfill our customer demand. And on the back of that, continue to grow the company, so we expect our revenues in the second half to be higher than the revenues in the first half. Our second priority is to make sure we continue with our operation and profitability improvement program. The combination of the higher scale at this product is going to help to restore the profitability. So we also expect our EBITDA to be higher in the second half than in the first half of the year.
And finally, to secure our financing and work on comprehensive plan to continue to expand our [indiscernible] and making sure that we continue to position PolyPeptide that as one of the most attractive partner as this market -- as the market develops. So this is what I wanted to share with all of you.
And Michael, why don't we move into the Q&A?
[Operator Instructions]
The first question comes from the line of Daniel Buchta with ZKB.
Maybe starting, I would have 3 questions. The first one, on the operating issues. I mean you mentioned the plan you have, if you assume or if you say full plan completion is 100%. In terms of percentage, where would you say you are in that sense? Are you at quarter, at half or almost through already? And then also related to that, what makes you sure that the large brand reactor related to your large customer order is really ready to work fully by the end of next year, latest then.
And then maybe you can share a little bit of insight how the talks with key customers and regulators are going? I mean are they nervous about the operating issues you had and the planned execution? Are they looking in more details at you? And then last but not least, maybe on the external financing. I mean, yes, given how profitability is developing because it's not a surprise. You're talking about that with banks, I guess. But I mean, at what conditions are we talking about? I would assume, given the interest environment we have, the funding cost would be pretty meaningful. And also in terms of covenants, given the low profitability, I mean, how closely would banks look at you? And could there be, at some point, an equity need even for PolyPeptide?
Thank you very much, Daniel. And I'm looking forward to meet you in person soon. So several questions, and let me just go for each of them. In terms of our operations plan, I mean, we started the [ program ] a few months ago. So I will say we are halfway through our operational improvement plan. Now it's very important to put this into context. This is an operation and improvement plan, which is related to expanding our infrastructure in a company which is growing very rapidly. If you adjust by the COVID-19 pandemic, our underlying business is growing very rapidly it's growing double digits.
Now most of the things we discuss are actually related to the fundamentals of running a complex fertile manufacturing side and pretty much under our control. So we are confident in terms of going through that process, but it will take time. And we have some clear milestones in terms of where do we want to be by the end of the year and then where do we want to be by the end of the first half of 2024.
Now in terms of the 600 liter, this is a key project for the company. One of the reasons why we are accelerating our CapEx in 2023 is to ensure that we have a 300 liters ready and it becomes operational in 2024. And at this point, with a few months away from completion, we are confident in terms of our ability to do that. And by the way, even without this delaying our site is one of our fastest growing site that we have within the network. So we are raising that our bet behind delaying is starting to play out.
In terms of our customer base, I mean, number one, we are expanding our partnerships. So I -- this is not a customer base which is concerned, but a customer base that is actually engaging with us in people partnerships. And that's what I mentioned that we have strengthened our position in metabolic and [ viral ] disease. If you look at our pipeline in terms of custom projects, we're actually increasing the number of projects that we have. That basically means that we are working with even more either large pharma or early-stage companies engaged in looking for complex peptide partners.
Now of course, we have to meet the operational and quality standards for our customers, and that is a key priority for us. But I would say that we are not in a situation where our customers are concerned. Actually, on the other hand, we are working with most of our key ones about expanding our relationship. Now in terms of financing, the company has a very attractive business case on the back of a significant growth. And our growth is driven by the market and our ability to fulfill the market.
And if you look at just the first half of the year and all the growth potential we have in front of us, you can have some good assumptions in terms of profitability and so forth. So on the back of that is that we have been able to secure to being a -- negotiations to secure this financing. And the actual financing cost, I mean, it's very small to allow this to the key levels of the company. It's not really material for us and is pretty standard for a company of our size with the growth opportunities that we have. So it's not really something that we have concerned.
The next question comes from the line of Vineet Agrawal with Citi.
Just one on profitability. You are expecting a loss in full year now with the first half EBITDA loss of about EUR 20 million and expected strong revenue growth in the second half. If I'm just trying to work out, it comes to EBITDA margin of only like mid- to high single digit in the second half. Now can you talk to why such a sharp increase in revenues is not probably translating into profits? I believe a majority of the old contracts where you had little flexibility in terms of inflation pass-through came to an end at first half. I'm just trying to understand if the pricing has been an issue. So yes, I mean, if you could provide some more color on the EBITDA margin ramp in the second half? And then how should we think about it in 2024?
And then just on CapEx. I was just wondering if you could clarify if the increase in your CapEx requirements, is it more towards making sure that your large Belgium facility comes online in '24? Or is it more of an incremental CapEx in view of the new orders? And maybe you can just update us on the progress of that facility.
Yes. Thank you very much, Vineet. So I mean, today, we are not providing guidance for 2023 or for 2024. The only thing that you should expect is that we have a net loss in the first half of the year and we expect to have a net loss in the full year. And what you can expect is that our second half EBITDA is going to be higher than our first half EBITDA.
In terms of the drivers of profitability decline in the first half, I think, as I mentioned before, you have a bit more than half driven by the inventory write-off and driven by this negative cost absorption. And then you have -- that is driven by two things. One is we are operating with a higher cost base and infrastructure, replacing a very profitable COVID business with new business with higher depreciation and all the investment necessary to make sure that we have higher revenues in the second half this year and in 2024.
And the other one is because of a lower operational productivity we have, but that is actually a smaller part in terms of the drivers of profitability. So we're confident in terms of increasing our profitability in the second half is because we don't expect this one-off to materialize is because we are going to have higher revenues and scale that will allow us to have -- that will fold higher profitability. So that's actually the main driver in terms of our recovery in the second half.
Now in terms of pricing, we have actually been able to have progress in terms of our pricing. The pricing for our custom projects but also the negotiations around our key agreements. And we have a customer base, which is very outstanding because the labor inflation is very visible. The raw material inflation is also very visible and that has allowed us to have good productive discussions. But most of the benefit of this price increase is going to be felt in the first half of 2024 rather than in 2023.
The next question comes from the line of James Quigley with Morgan Stanley.
So just on sort of visibility. So can you give us a sense of your visibility on the cost base and the internal reporting structure. So I'm just trying to get an idea of, obviously, the first guidance was given without management in place. But part of the delta seems to be due to higher underlying costs, half of it is a one-off reduced underlying costs, so some investors will be getting concerned about your own internal visibility and your ability to guide the market. So can you comment on what needs to change there and how that can be improved?
And second of all, again, you mentioned half of the impact was one-off for the first half. Revenue guidance -- revenue is in line with expectations and guidance. If you strip out the one-offs, where would first half have landed in terms of an EBITDA margin? And how would that impact the original full year guidance if there are no one else. Thank you.
Thank you, James. And actually, great to hear your voice. I heard a lot about you, so I'm looking forward to get to meet you. First of all, I would say in terms of guiding the market, clearly, if you look back, the company has been trying to guide the marketing, but has been a very volatile environment. And I do think there are some clear lessons in terms of how to guide the market going forward. Basically around being, I will say, a bit more prudent and have a much better understanding the volatility and complexity of what the company is trying to do, and that's actually probably the only thing I can really say regarding that.
In terms of our guidance in March. In March, we basically said that our revenues will be comparable to last year and that our EBITDA will be significantly lower. And if you strip the impact of the write-offs and the impact of the negative cost absorption, basically, more or less, we will be close to our guidance. Our revenues will be comparable to last year, and you will have EBITDA significantly lower, but is still positive.
The next question comes from the line of Konstantin Wiechert with Baader-Helvea.
Yes. Juan Jose, Lalit and Michael, thank you also very much for your short introduction. And I'm also looking very much forward to meet you in person. A couple of questions already answered, but maybe a bit more detail would be nice on the revenue. I have to say, in the first half now, the underlying growth of something more than EUR 30 million is actually quite impressive given your operational issues. And I was just wondering if you could give a bit more color on this, maybe also on which sites we were able to record this revenue, like was it in Sweden and California since I think this were the site where the Novavax capacity became idling or was it also in Belgium already.
And then also, this was also a bit touched already. But again, on the EBITDA, if I look into it, and I add back the impairment and write-off, I still have a difference of around EUR 40 million to the underlying profitability that I have in my model and I'm kind of thinking about where this is coming from, I think the staff based in the first half is still relatively flat. So they are mainly from inflation, but not so much from an increase in staff rate maybe? And how much of this is probably then related to additional training or also severance payments made yes, some color in this regard would also be nice.
Thank you very much, Konstantin. And this is something that was actually one of my main insights when I joined the company. We're not talking about operational challenges in a stable company. We are talking about a company that embarked in multisite expansion growing very rapidly and then experiencing some operational challenges in the context of that expansion. And I will say that's a very important distinction because the company's growing very rapidly. Excluding COVID, we are growing double digits and I would say it just shows the potential attractiveness of the markets we participate.
Now in terms of which sites are driving the growth, I mean, Braine is one of our fastest-growing sites as it should be because it has been a key investment, a key investment for our company, but Torrance and Malmo are also doing very well. So actually, we like the fact that we are growing rapidly as a company, but this growth is coming from our sites around the world.
Now in terms of the EBITDA. You have basically around EUR 46 million of difference between the EBITDA in the first half of the year and the EBITDA in the first half of this year, and a bit more than half is driven by the inventory write-off and by the cost absorption. So that is one piece. I think a bit less than half is driven by the other drivers, which we classify one, which is the higher infrastructure and cost base ahead of our second half growth and 2024. Within that, you have the negative mix because what we are doing is replacing the profitable COVID business by new business that we are scaling up, the high investment in terms of our cost to make sure that we can support these higher revenues in the second half, and then you have a higher depreciation. And then you have a lower productivity, the lower operational productivity, which is more or less in line with what we experienced in the second half of the year. So that's basically the bridge. And I think in our earnings call, you are going to be able to see that more clearly.
Now when you look at that bridge and you look at which ones are one-offs, and which once are investments a set of growth and which one are really more related to our operational performance, you can see what will be the impact as the company continues to accelerate. And that's why we are confident that as long as we focus on our execution and fulfilling our customer demand, the company will be able to continue to grow and restore it's profitability.
Sorry, if I may just follow up on this one. So I think -- when I hear that, it's kind of that you said now in the first half, the productivity has not so much improved yet, right? So that you're still having lower unit profitability on your project than you should have on a normal basis. Is that correct? And is this expected then to already change in the second half of the year?
Yes. The most important thing is that when you look at the financial results in one period, it really reflects to what happened in the previous period. So if you have a production time of 4 to 5 months from the time you start the time, quality of release the product, that basically means that whatever you experienced in revenues in the second half is for a fees that you produce in the first half. So when you look at our operational productivity, really the financial cost this year, the first [indiscernible] that happened in the second half of last year, so that is -- that's very important consideration.
But as I mentioned, again, our ability to grow reflects our ability to produce at a faster pace than in previous periods, and we are doing that. And we have a very clear plan with very clear milestones and we are executing that, and it is within our control. It just takes time for us to do it, and we know that the improvement we're seeing this year, we're seeing in this half of the year, we will see it reflected in the second half of next year and so forth, but that's basically how you should look at that.
The next question comes from the line of Laura Pfeifer with Octavian.
Also a couple of questions from my side. Maybe first, I think this was already answered in the first section, but on the financing, can you give us a bit more details about the size of the funding you would look for? And also, please, could you confirm that you would, at this stage, exclude a capital increase? I'm not sure if this was answer, maybe I didn't hear it.
And then secondly, I also thought that you previously said you were working on your contracts. And here, I'm just wondering if this is still expected maybe in the next couple of months that we could hear additional announcement? And also, would this be contracts that involve some kind of customer participation, be it on net working capital or CapEx?
Yes. Thank you very much, Laura, and great to hear your voice. So in terms of the financing, first of all, the financing is focused on -- data financing is focused on meeting our working capital needs and our CapEx needs -- our company for next year and so forth. So just talking about -- it's not a small finance. Let me put it this way. And as soon as we have the financing in place, we are going to announce it, and you will be able to see the details, but we are in a very advanced stage in the process.
We are not going to raise capital through equity. If you look at our valuation right now, I mean we believe it does not reflect the growth of the company and ability to create value. And I think that we think right now is for us to focus on our execution, show how our rapid growth translates into profitability and focus on securing the funding through bank financing basically. And that's really our strategy.
Now in terms of customers, as you know, these customers are confidential. The only thing I can say is that we are negotiating new contracts. We had in basically in the final stage of these contracts. They are in metabolics and [ viral ] diseases and basically positioned the company very well as this GLP-1 market develops. We are basically working with every major player engaged in this new market. And that's as much as we'll be able to share.
Now in terms of funding, we have a clear funding approach for some of these large projects where we work in partnership with our customers and come back with an approach where they participate also in terms of funding. And that's basically the approach we are taking for new contracts and future contracts. We believe that the more dedicated, for example, the manufacturing equipment, the more we need the customer to participate so we can share that risk on these projects.
The next question comes from the line of [ Dominic Pelges ] with [indiscernible].
You've not really talked, I think the question was to start whether you had to face any severance costs, but could you give us a bit of an overview and in how much your staff figure has changed during the second during -- sorry, during the first half? And what additional needs you have for staff. I mean I recently visited [ Bartrem], and it's incredible. I mean they reached out to us to the media that -- since they have to find now so many people, said that they were talking of 700 people alone just for their -- in Bubendorf, where the headquarter obviously is. Yes, please, if you could give us there a bit of flavor as well.
Yes. Thank you very much, Dominic. And -- so in terms of severance, first of all, of course, we are going through a CEO, CFO transition, and there will be a higher cost this year as we go through that process. Outside of that, I will say our cost of severance is very similar to the cost of severance we have had in previous years. There are no really major changes unlike other players that are basically reallocating the infrastructure towards a specific geographies. We are actually growing within our existing sites. And that's why you -- there is no trigger of major severance. We are not closing one plant to move to another. Basically, does not within our strategy. But clear as a company grows, as we sign more contracts and advanced partnerships, we will continue to hire highly specialized talent and that's basically expected and within our plans.
I think if you look at the time of the IPO in terms of where we are today at the end of the first half of the year, you may see a significant expansion in terms of FTEs now.
The next question comes from the line of Rupen Boyadjian with Finanz und Wirtschaft.
Can you give us some more color about -- on these write-offs. Is it basically all Corona-related or also others? And if it's Corona related, what is it exactly? Is it finished -- mostly finished product that you were unable to sell? Or what is it? And then also, you said you're taking measures to strengthen the organization, operational performance and also capabilities. Can you give us some more details or 2, 3 examples what that means?
Sure. Thank you very much, Rupen. In terms of the write-off of the inventory, I would say it is all of the above. We had a detailed technical and commercial assessment of our inventory and we concluded that everything was to do this write-off, and it's about 5% to 10% of the total inventory. And one of the benefits of doing this is that it allows us to focus on the fulfillment of our customer or from the second half of the year, which we think is also a benefit in terms of doing this inventory write-off.
Now in terms of a strengthening the organization and capabilities. On the capability side, the two key priorities are around green chemistry and digitization. And this is very important as we engage working with -- as most of our growth is going to come from large pharmaceutical companies, it's very important for us to continue to evolve in those capability areas that help us to increase our levels of automation, ability to transfer data and information and of course, to make sure that we improve our environmental credentials. And then there are some other capabilities around running the company better. And we have -- we are bringing new leadership in some of our sites. We are strengthening our corporate headquarters with more analytic capabilities going back to the point about making sure we have a much better understanding in terms of the business and our forecasting.
And of course, I'm very excited to soon share the name of a new CFO for the company because I think that it is going to start to play a very important role in terms of not just the running of a company, but also the future expansion that is going to be key in our growth journey.
There is the last question on the telephone, which is a follow-up that come from the line of Mr. Buchta with ZKB.
Maybe asking on the CapEx needs, again, which you said are going to be higher. Just to clarify, is that higher because you underestimated your CapEx needs initially? Or is that related to really higher demand compared to what you were expecting in the close future to come? And then I still don't understand what you mean with this one-off negative cost absorption reflecting inventory optimization. What does that mean exactly?
Thank you very much, Daniel. So just to be very clear, this year, we are accelerating our CapEx spending that's primarily driven by our [indiscernible] to secure the completion of our 1,600 liter project, so that's really the main driver. And this is very important because it's supporting a key contract that we have for next year and also will enable us to better support what is an increasing customer demand, so that's one thing.
In terms of cost absorption, I'm actually going to invite Lalit to explain the definition of cost absorption and why would you optimize your inventory, you see a negative cost absorption hit in the P&L.
Thank you, Juan Jose. So PolyPeptide, like many companies follows a process of absorption costing. What this means is that the direct labor and overheads are allocated on to work in progress and obviously, on to finished goods. So when you have a situation where the work in progress and the inventory is growing, you have a favorable cost absorption. When you have the reverse where the inventory is being optimized, which is actually the good thing, you have a negative cost absorption. So in this comparable period between H1 of 2022 and H1 of 2023, we have managed to reduce our work in progress and finished goods. And therefore, you have the swing in cost absorption, which is impacting us to the extent that you see that Juan Jose is referring to in his initial comments. So -- but I'm happy to speak more about it if it's not clear.
There are no more questions on the phone at this time. I'd now like to hand over to Michael Staheli, who will read out questions from the webcast. Michael?
Yes. Thank you. We have a few questions on the chat functions, but most of them have been answered. They relate to inventory CapEx I think that has been covered by the questions previously. Also a question related to CapEx guidance. I think here, we said that we come back with guidance with half year results. That leaves me with one remaining question from the chat, which is for Juan Jose, which relates to the second half of the year. What makes you confident to be able to resell the operational issues or to improve?
I mean, -- so thank you, Michael. So in terms of the second half of 2023, our expectations is that both our revenues and EBITDA will be better than in the first half of the year. And basically, we have, I would say, a lot of visibility in terms of the orders and what will be possible to achieve many of these assets are already in production. So I think we are confident in terms of being able to meet those expectations.
Now in terms of the operational improvement, again, we have, I think, discussed on this call in terms of what is the operational improvement program is around making sure that as we expand the company, we do it in the right way. And there are some very complete KPIs in terms of things that we need to make sure that we are meeting in terms of the way we onboard talent, the way we train them, making sure they are only deployed once they are fully trained and then as we go through our manufacturing process and quality, there are some clear benchmark we're going to meet. Again, we expect to improve in the second half over the first half and then we expect to continue to improve in 2024. Actually, these operational improvements, I think in general, you never finish as long as you continue to expand the company and investing in new projects and new sites, so -- but we should be able to be in a better position by the end of 2023.
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