HMS Networks AB

STO:HMS

Earnings Call Transcript 2023-Q1

[Operator]

Welcome to the HMS Networks Q1 Presentation for 2023. [Operator Instructions]

Now I will hand the conference over to CEO, Staffan Dahlstrom; and CFO, Joakim Nideborn. Please go ahead.

[Staffan Dahlstrom, executive]

Thank you. Good morning, everybody. Welcome to this Q1 update. I'm Staffan Dahlstrom. Greetings from sunny Stockholm, and Joakim is sitting down south, south part of Sweden. I hope we also have a sunshine -- at least we have sunshine in the reports.

And the agenda for today is that, I will start with a short summary for you who are new here and a small business update, and then Joakim will make a deep dive into the financial results of this quarter.

But let's start with a few highlights. We are really happy to note that we have a record level of net sales, up 49% from Q1 last year and also a little bit better than the strong Q4 we had here in ending of last year. A weaker point, but expected, is more moderate order intake. We see a decline at a really, really strong level, 2022, and we will discuss this in detail a bit later.

Profit wise, very good development, a record level, SEK 211 million and EBIT margins looks good, cash flow, okay. Joakim will also go back into these details here, and a good solid EPS. So we're really happy with this quarter. And let's move into just a short business update before we go into more numbers.

If you are new on the call, HMS, we work with industrial ICT, Information & Communication Technology. We're quite well established after 30 years in this specialized niche of industrial automation and communication. We have soon 10 million devices connected in our customer system. We have over 400,000 machines connected to our cloud solutions for remote access and IoT. We are a technology company focusing quite much on new technology. Right now, we're busy with 5G, Smart Grid, AI, IoT and these things. But most of our customers are traditional manufacturing companies who love to talk about technology, but really like to have established technologies.

So we stand with one foot in new technology, but one foot in the existing and also legacy technology that is very important for our customers. And we're headquartered in the beautiful city of Halmstad, Sweden, on the Swedish southwest coast, but most of our business, I guess, 97% is outside Sweden. As a company, we are a little bit more than 750 employees around the world, operating in 17 countries with subsidiaries and over 50 countries with partners and distributors.

Last year was good, SEK 2.5 billion in revenue, and we are on an important journey until 2025 with our top 3 goals. Goal 1 is to become a net positive in our own CO2 emissions, not because we are a big emitter of CO2, but we want to show the customers and our industry that it's possible to have aggressive goals here, and we can do much more. But we also work a lot with our customers to help them reducing their CO2 emissions as part of their automation and the energy-saving ambitions.

Secondly, we believe that happy and high-performing employees generate loyal customers, and we love loyal customers. So let's start focusing on having great teams. So we measure Net Promoter Scores on our employees, but also our customers. Target is plus 30, and we are at the moment and hopefully, for the long run, way over this target.

And we are approaching our long-term goal of being more than [ SEK 5 billion ] in 2025. And for you who are quick in math, you note that Q1 revenue times 4 is approaching this. So we are getting there as well.

So what we do is to help our customers enable valuable data and give them insights from machines and systems in their production processes. So we actually make the products -- our products make their machine communicate to make sure they can have a more efficient and more sustainable manufacturing.

We work with 2 main segments: industrial automation, where we have 3 subsegments, manufacturing, which is more traditional factory automation and process automation. We have customers in transport and infrastructure, it could be anything from harbors to logistics centers, and warehousing, and we have also business in power and energy with both wind, solar communication but also more in battery systems and energy storage and these kind of things.

And we have a separate group working with building automation. This is not home automation. It's large commercial buildings like airports, shopping malls, hotels, where we primarily work with communication around HVAC, heating, ventilation, air conditioning, which normally is a very costly expense for building owners. The common denominator for all these things is the communication technology where we provide the communication technology and making sure the system works well.

We have 2 types of customers in general. We have makers of industrial equipment and we have users for automation systems. If we look into the details of this, on the next slide, we can take a closer look on our go-to-market on the left side with the makers. There we have device manufacturers where we sell technology that they embed inside their devices to communicate. This is where we started over 30 years ago, and it's today 44% of our revenue.

We have a sticky but quite time-consuming complicated sales process with design win where we help these customers embed our technology inside their devices. Since this is both complicated and time consuming, we only work with direct sales here. We have also machine builders. Our dream is that we should be included in every machine. We are not there yet. We are more specified as an option in the bill of material. So if the owner of this new machine would like to have remote access or integration to certain systems, the machine builder offer us as an option for the selection in their configurations. And here, we work with both direct sales to large customers and distribution in many, many smaller machines.

And finally, on the users. Users for us could be Volkswagen and Amazon and this kind of builders of cars or logistic systems and things like that, using the automation system. 29% of our revenue -- either we work here with project sales and system integrators or just playing product sales, either through traditional distributors, but to a more and more growing extent, e-commerce distributors.

All right. So if you look on the business update, before going to numbers, we are super happy with continued strong invoicing. Good start of the year both for delivery capacity that's been improved, but we will see that availability of material and the semiconductors have been difficult to acquire before. It's getting easier. It's not perfect yet, but it's getting easier. So we think this is a solid start of the year, but also customers see that the component situation is better.

So of course, they also destock a bit because they expect our lead times to be better and better. And not only our lead times, lead times in general in the industry are slowly improving. So in Europe and Asia, we see some destocking. But in U.S., we see good business and expansion. We also see a very good business in the building automation still. So that is also quite strong.

And as I mentioned, improved delivery situation for critical components in the semiconductor field helps us. And this also means that we spend less money on the spot market, very expensive purchasing of critical components. So this is also helping our gross margin. And Joakim will talk about this in more detail.

And finally, we are, as we speak, in Hanover, Germany, presenting our new integrated business where the acquired Procentec, which we acquired 2 years ago, is now fully integrated into a business line of Anybus, and we now have this fully together with our sales force and our systems. So we see that this will probably give a boost to the Procentec growth going forward.

So Joakim, we are keen to look on the details.

[Joakim Nideborn, executive]

Yes. Let's start with the order intake then. And you saw it's SEK 682 million that was shown in the quarter, so a 20% decline from our record quarter in Q1 2022. And the quarter is a bit bumpy. We're starting off with a very strong January, a lot of long orders as we've seen in -- during 2022. And then February, March has been showing a lot of destocking from some of our larger customers when, as Staffan explained, the whole situation -- supply chain is getting much better, and then there is no need to have these high safety stock levels that many customers have been building up.

And then we had a good ending to March with some good orders in the last week of March, giving us a rather solid order intake given the situation. We knew that we were going to have a massive decline compared to that Q1 2022. With the SEK 682 million, we're still rather happy to be able to close the quarter in that way.

Looking at the different markets. The destocking has been pretty clear in Europe and Asia, where we have some of the large machine builders. It's good to note that -- Americas that we've been seeing a bit of a decline throughout the end of 2022. It's holding up really well. And we showed the second-best quarter ever in terms of order intake in the U.S. And maybe we started to see still a little bit coming back after this decline. We saw that early in the U.S., and maybe already through the worst. Let's see what the future will bring.

About the different offers. We see that building automation is performing very well. We have not seen the same buildup as we've seen in the industrial automation business throughout 2022 in terms of ordering. And now we see a very solid demand on the building automation business.

At the same time, we see this destocking within information centric where we had especially our Ewon brand, where some of our big distributors are starting to lower their inventory levels. So we hope that, that will turn around for the coming quarters.

All in all, we closed with a book-to-bill of 0.88, which we think is a rather healthy pace of taking down this big order backlog. I'll show that in a few slides how that looks.

Maybe first, let's have a look on this slide that we've been showing now for a couple of quarters, with those long boost orders. And what we can see now in Q1 is, for the first time in a very long time, we see that we don't really have any boost orders. And I guess, SEK 682 million should be seen as the net because we do get some long orders, but we're also some -- destocking from those previous boost orders.

So all in all, we think SEK 682 million is pretty good reflection of the underlying demand in the business. And if you were to adjust Q1 2022 for those SEK 250 million in boost orders, you will see a 12% increase in the underlying market development, which we think is very healthy.

And then going over to our net sales. Good to see us step our -- we're managing to beat the strong Q4 and set another record level in terms of net sales with SEK 773 million and a 40% organic growth. This is good work by our supply chain to manage to push this out. And we see a rather much better situation in terms of capacity of components. Still some issues, but not impacting the sales too much, I'd say. And this makes us -- puts us in a good position to also then capitalize on this solid backlog that we have.

We note that we have record level of sales in Americas and Asia, which are taking a lot of share on the overall group sales. That's fine to see.

And if we go over to the next slide, looking at the backlog and putting this into relation, we see that we are taking down some SEK 91 million of our backlog, in closing about SEK 1.3 billion. So still a very strong backlog, and this puts us in a good situation to continue to show growth throughout 2023.

And looking on the right-hand side, also a graph that we've been showing for some time now, the amount of our orders that we get delivered more than a quarter out. We don't see a big change to this. And if we were to see this book-to-bill in -- becoming lower than this 0.88, then I think we also should be starting to see a change in the delivery times to our customers. So we hope that we should be able to take this down over the coming quarters, but we think it will be a slow process.

And then looking at the sales per region. As I said, Americas, APAC now together 40% of sales, and the EMEA region represents 60% of sales. We think this is a healthy evening out. And we're happy to see the Americas and APAC region taking a larger share of the group to stand on more legs for our side.

If we go over to the profitability, pretty good graph on the left-hand side. Continued increase on profits, costing with an EBIT of SEK 211 million and very healthy margins of 27.4% compared to the adjusted margins of 21.7% a year ago. So we're very happy with this development. And the main drivers behind this is, of course, the volume in itself, the gross margin and that we're increasing OPEX quite a bit, but not as much as the sales growth.

So yes, commenting on the gross margin, we're happy to present 64.8%, up 3 percentage points compared to a year ago and continue to improve the margins from the second half of 2022.

The main drivers behind the development is, of course, the price adjustments we made towards our customers. And that's been going pretty much as planned, and we've been seeing the results that we expected to see. The spot market purchases have been fewer. We still have a few million on that, but it's significantly lower than a year ago. And I think that's been declining throughout 2022 as well with the component availability becoming better and better.

We also have a favorable currency situation. The Swedish krona is rather weak in relation to all the big currencies, euros and dollars would be our main ones. So that is also helping us. And finally, the scale that we're getting into production. So we get better utilization on our fixed costs in manufacturing. So all in all, I think the price adjustments, the current situation and the increase in production volumes represent roughly equal parts in comparison to the Q1 2022 margin of 61.8%.

And then finally, I wanted to make -- just on the OPEX side. So we know we have a dramatic increase with 33%, SEK 290 million. And 2 main areas is, we continue to invest in the sales and marketing organization to make sure we can continue to keep the growth pace. And then we have -- we're also just in the process of changing ERP system, which is always a big project, and we're going to go live in a couple of weeks with the new system and that's been driving some cost for us, especially now in Q1.

Looking at our EPS. So SEK 3.70, solid EPS. The net financials are positive revaluation of cash and foreign currencies behind that, so still on rather small level, so probably clean financial -- net financial, I must say, and a solid EPS as a result of the strong deliveries.

Then a few notes on the cash flow performance. So we do SEK 155 million, which is almost twice in comparison to a year ago. That's good. We could have seen a little bit better here. We still have some inventory that we're building up. We're making this merger with Procentec business which's been causing some short-term buildup, and also with the high growth we're seeing, we need to make sure that we have components in place to meet that. So it's also an effect of the high growth pace. The good deliveries in March is also earning us with a high accounts receivable, which is hitting their working capital a little bit.

We see small signs that some customers are waiting a few extra days to pay. So we're trying to chase them on this. But I guess this is also an effect of the fact that money started to cost something again with the interest rates going up, so we need to chase that, as always. But all in all, a rather solid situation on the cash flows, cash conversion of 64%. We would like to see a little bit higher there. I'm sure we'll see that in the coming quarters when we don't have such a high inventory buildup.

Just a final note on the balance sheet. So we see a bit of an increase in leasing debt due to some new offices. So that's nothing to worry about. And otherwise, we can see that we have -- actually, our cash is larger than our interest-bearing debt for the first time in many quarters. So that puts us in a good position also to look for M&As, which is an ongoing topic, of course, for us.

Just to summarize the first quarter before we let the participants ask questions. So we say that we see destocking starting to happen for -- in some areas. And the order intake is not at the same level as it was a year ago with the boost effects. And still, we must say that talking to our customers, they are adjusting the inventory levels, but they are still quite positive on the outlook and the demand from their customers in their turn. So that's very good.

And in terms of the deliveries, we have a very good quarter and not a record -- with record sales, gross margins, EBIT margins. So I think we're quite happy the way -- so far at least, we managed to navigate this. It's probably a challenging macroenvironment with high inflation and hope we continue to deliver in a good pace.

So with that, let's open up the line for questions.

[Operator]

[Operator Instructions] The next question comes from Simon Granath from ABG.

[Simon Granath, analyst]

A couple of questions from me. Certainly, one large area to discuss is about the boosted orders, which come in largely neutral here. Is it possible to add some more color on how this progressed through the quarter? Was it a material change towards the end? And would you expect a neutral boost in Q2 as well or is it more likely to be negative?

[Staffan Dahlstrom, executive]

Joakim, would -- do you take it?

[Joakim Nideborn, executive]

Yes. I think I had -- did put some light on it, but let's take it again. So I think we started out in January. We also saw some of these long orders that we've been seeing in 2022. And then I think February and March, pretty much throughout the month. We've been seeing this destocking from many of our customers. And then we ended up -- the last week of March was really solid with some long orders again.

So that's why we said, all in all, we think there was pretty much flat in terms of the boost effect or destocking or whatever you want to call it. That was pretty much flat. So speculating for Q2, I think it's probably more likely that we will have a slightly reversed boost effect, more destocking than long orders for the coming quarter, at least. But that would be our best guess.

[Simon Granath, analyst]

And on the regions, you sound relatively upbeat on North America in the quarter. Was the performance relatively in line with your own expectations? And from history, how has North America performed versus other markets in terms of this so-called time period for when the region recovers after a softer period, et cetera?

[Joakim Nideborn, executive]

I guess, yes, from what we've seen recently, North America seems to be really quick. They've been earlier to come into a decline phase, but also earlier to recover. So it's been going quick over there. And I think what we saw in end of 2022, where we saw a bit of a -- we're off in order intake in North America. We were a bit positively surprised it came back quite well in Q1 here.

And as I said, it was the second-best quarter we've seen in terms of order intake in North America. And maybe we didn't expect to see that. So it's a little bit better than what we had expected for North America. And let's see what the future will bring. But hopefully, we've been through the worst in terms of decline in second half of 2022 for North America.

[Simon Granath, analyst]

And on OPEX, you -- as you point out, it's growing well in Q1. And I've asked this question before, I know. But how do you view your own investments in light of the current environment? Also, were there any nonrecurring items in Q1, primarily relating to the -- your mentioning of the implementation of the new ERP system, et cetera? Was it a rather clean OPEX quarter?

[Joakim Nideborn, executive]

There are some nonrecurring in terms of the ERP system. Of course, that's -- probably that's been going on for almost a year, but in a lower pace. And now it's in really high pace, and we do have some consulting help in Q1 that is costing a couple of extra million. So I think it's -- there were a few extra million added there, I would say, is nonrecurring.

But I think the investments we're doing in the sales and marketing organization is, of course, here to stay. And we're also building up some back-end functions a little bit. I think we've been growing quickly in the last 2 years, and we also need to support that with backend functions, that is with some more capacity. So that's also part of the bill that will, of course, stay there.

[Simon Granath, analyst]

And I also find it interesting about both reading and hearing about your -- you reaping the synergies between your recent acquisitions. How much are you pushing here? Could we see more of these types of synergies being found? And in the longer term, could you have even fewer brands than you currently have?

[Staffan Dahlstrom, executive]

Maybe I can talk a little bit about that. I think when we've done acquisitions in the past, we've been quite slow or at least careful in doing integration because we want to make sure that we do the right things right. I think -- now after 7, 8 acquisitions through the years, I think we have a little bit more self-confidence in what is working, what is not working. So I think this time period of 1, 2 year after the acquisition that we are integrating, when we see synergies. I think we will see more of that.

We see good effects on supply chain. We see good -- potentially good effects on sales. However, sometimes it's easy to overestimate how quick it should be because it looks great in PowerPoint, but then we need to do changes in real life. That takes longer time. So I think what we found now with Procentec is it's a good mix of making sure we have a high tempo, but making sure also that we don't act too fast and do things that is not productive for the business. I think this is what we do right now is good. But I think every acquisition is different. So we don't really have a blueprint how to do this in -- on the detailed level. We need to adopt to each situation.

[Operator]

The next question comes from Joachim Gunell from DNB.

[Joachim Gunell, analyst]

So obviously, very impressive margins in light of this inflationary environment. So can you just talk a bit about the moving parts here and what you see -- what you want to see before revisiting your 20%-plus EBIT margin target, especially as the gross margin which has come up considerably since you're committed to that midterm ambitions?

[Joakim Nideborn, executive]

Good question. I think we have a 2025 target of being more than 20% EBIT margin. And we've been talking about this several times that this may be on the shy side. Right now, this is a target we're having. Maybe we should change it, but let's see how these discussions go in the board going forward. Right now, we have no other targets. But I agree with you that it looks to be on the low side.

[Joachim Gunell, analyst]

And then perhaps just a final one for me. Can you just talk a bit about Procentec being a part of Anybus, how that will increase its growth prospects?

[Staffan Dahlstrom, executive]

Yes. I think, if you look on the sales side, what we're doing right now is to integrate the European side of Procentec, where they had a German office, an Italian office. We integrate this fully into our, what we call market unit Continental Europe. We see that, that will give us a little bit more customer access, we think. But in addition, we're also now doing quite big efforts in the United States, where Procentec have not had hit its own presence, and we're using both HMS own staff here, but also some of our partners to really push Procentec.

And we're taking some attempts in Japan as well to be more successful. So I think it's a combination of better penetration where they have been, but also open up some new key markets for them. So it's from a sales point of view, more market access. From a margin point of view, I think we can see some improvements going forward in logistics, purchasing of components and manufacturing and things like this. So we hope that will also be a potential cost synergy or gross margin improvement for them going forward.

[Joachim Gunell, analyst]

And just a final one, actually. When it comes to the -- what you quantified as boost orders throughout 2021, 2022, are there any sort of conclusions that we can draw with regards to that there are very specific verticals or end markets where these boost effects were accentuated or is it more broad-based?

[Staffan Dahlstrom, executive]

I think in general, we have seen that -- especially in Japan, we have had a higher portion of boost effect. Maybe they are used -- not so used to high interest rate there. So they don't care so much about how much they put in inventory, but they also have a different attitude about supply precision and lead times. So I think there, we've seen a better buildup. But Joakim, can you -- any other -- do you see any other things related to this?

[Joakim Nideborn, executive]

I think it's difficult to say, Joachim, because the main area where we see this is the embedded business where our priority is a part of the bill of material. So obviously, the customer will not be able to deliver if they don't have goods on stocks. So that will go into many different end verticals. I guess what we saw a little bit now, trying to mention something in Q1, was that the automotive business, especially the electrical vehicle business, was maybe a bit weaker than expected. That's what we heard from our market units. And so, that's maybe 1 vertical, but otherwise I think it's rather broad based in terms of taking down inventory levels if they feel that the deliveries are more precise and components are easier to obtain.

[Operator]

The next question comes from Viktor Hogberg from Danske Bank.

[Viktor Högberg, analyst]

So first question is on the gross margin. You added up the drivers for the increase here. But how much was the FX effect? And how much is sustainable? What would you see as a sustainable level when the FX effect tails off?

[Joakim Nideborn, executive]

So what I said was, going from 61.8% to the 64.8%, that it was about similar parts from FX, volume and price increases, basically. So what's sustainable, of course, it depends on the what the FX rates would be. So if we were to go back to the FX rates that we had in Q1 2022, I think we would be seeing roughly then a percentage point drop in margins. That's basically what we said.

[Viktor Högberg, analyst]

But if we would remain at this level, the 65% would be more representative?

[Joakim Nideborn, executive]

Correct.

[Viktor Högberg, analyst]

And what kind of puts and takes do you see to that -- to the gross margin, thinking -- and this is on growth as well. The price hikes you have made, that is driving part of growth now in Q1. Now that the supply chain seems to be working again, do you see any risk for price cuts in any parts of the business that would affect growth for the gross margin in this year?

[Joakim Nideborn, executive]

Not what we see right now. And I think if anything, we feel it's still a bit of a push upwards from our suppliers, and we do see some cost increases on components also in Q1, maybe not so much driven in material itself, but more in terms of labor increases at our EMS's sites. That's the discussions we're in at the moment. So I think there is -- maybe there will be a turning point, but it's nothing that we see so far.

[Viktor Högberg, analyst]

What is the level of certainty on the order book? And also, what is the part of the order book that is to be delivered in this year? And any part of it that will be delivered in 2024?

[Joakim Nideborn, executive]

I think we have somewhere around SEK 100 million for 2024, if I recall correctly. So majority for '23.

[Viktor Högberg, analyst]

And in terms of customers, we know that you haven't seen that historically, customers pulling parts of the order book. What do you see -- given the right around certain outlook on a macro level, do you see that kind of discussions with your customers that they might do something with the orders they have already put, in or are they're firm on the orders that have put in?

[Joakim Nideborn, executive]

The discussions we're seeing is, some customers are asking to push out orders a month or 2, also to navigate their inventory levels. So I think that we're probably going to see for the rest of the year as well, some discussions where we will end up in those situations. But cancellations, we haven't seen any so far.

And as we said before, we don't accept cancellations. So these are firm orders, and then maybe we can discuss timing a little bit.

[Staffan Dahlstrom, executive]

I think just to add on this, Viktor, I think also, we are coming from a situation where most of our markets used to deploy some kind of just-in-time philosophies, especially in the automotive. I mean they really burned their fingers the last couple of years. And we believe that it will take some years before it moves back. That's cost efficient when all the systems are working. But when they're not working, it's very expensive.

So I think also customers will not only think about this from a financial and inventory point of view, but they will also think about this from a risk point of view, and they will still remember these difficult days. So we think it will take longer time than just logic and financial discussions. So I think they'll will be feeling that it's better to -- that have a little bit of extra inventory than what they used to have, too little inventory.

[Viktor Högberg, analyst]

Yes, some kind of new normal.

[Joakim Nideborn, executive]

Yes.

[Viktor Högberg, analyst]

And in terms of sourcing then and delivery capacity, because Q1 deliveries were better than Q4 -- in connection with Q4. You were a bit hesitant on the actual delivery capacity for this quarter. What kind of visibility do you have for Q2? Do you have the capacity to deliver on the same pace as you did now in Q1, or any color on the delivery capacity, or what customers want to have delivered for the next quarter?

[Joakim Nideborn, executive]

So I think what we can say -- do you want to go, Staffan?

[Staffan Dahlstrom, executive]

Do you --?

[Joakim Nideborn, executive]

Okay. So I think what we can say, is in terms of delivery capacity, I think there will be no problem to match the levels we saw in Q1. Now I think we're coming into a different situation. As you point out in your question, now it's more down to what does the customer want. So I think in terms of capacity, we're there, and now it's more of timing or the volumes. And I think this is difficult to say because we know we also get a lot of book and turn orders, and now we can handle that in a good way. But yes, I think we will have a solid Q2, maybe not as good as Q1.

[Viktor Högberg, analyst]

In terms of delivery in absolute numbers, that is?

[Joakim Nideborn, executive]

Yes. Correct.

[Viktor Högberg, analyst]

And in terms of M&A, you required forward-leaning in connection with the last quarter on you taking a step up in the targets you're looking at in terms of size. Do you have any progress here? And also on the financing side, how far would you be willing to go or comfortable to go in terms of financing? And I would assume that would be mainly debt financing then in terms of gearing?

[Joakim Nideborn, executive]

I think you're correct that we'll go for as long as we can, debt financing. And I think -- a net debt-to-EBITDA of some 2.5, I think we would not be a problem. We could go a bit higher than that as well, but maybe for a longer period of time, 2.5 would be sort of a level that sounds okay. In terms of targets, not a lot new to report. We do have some early discussions, but nothing too hot.

[Viktor Högberg, analyst]

Is that -- I think in the discussions that you're having, because parties you're discussing with would probably be seeing the same outlook as you do. Would you say that something has changed in terms of pricing and the expectations in terms of multiples recently there?

[Joakim Nideborn, executive]

Yes. I think we haven't really gotten to that phase. I think it's probably less fluctuation in the private market than what you see in the stock market. But we've -- as you know, we've been doing the last couple of deals around valuation of 9, 10x EBITDA enterprise value. I think that's where we would expect to end up in most cases.

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Staffan Dahlstrom, executive]

Thank you, operator, and thanks, all participants. Thanks for joining us this morning to look on our Q1. We think it's a good report. We need to keep a close eye on the order intake, of course. But right now, it's also a focus for us to reduce our order book and making sure we give work and service to our customers. So right now, we are not too worried about a little bit shorter order intake. It actually can help us to be improving our service level instead. So with that, I would like to wish you a nice day and look forward to talking more with you all after Q2. Thank you. Goodbye.