Troax Group AB (publ)

STO:TROAX

Earnings Call Analysis

Troax Group’s Q2 Growth Highlights

Troax Group saw a 6% increase in order intake and a 5% rise in revenues, despite market headwinds. The company maintained a resilient EBITA margin of 16.8%. Regionally, the UK and APAC markets experienced notable growth. Troax closed an acquisition in the Czech Republic to bolster Eastern European growth. The company’s net debt-to-EBITDA ratio is at 1.1x. The Garantell acquisition, although facing some challenges, is contributing positively. Looking ahead, Troax remains optimistic about further growth and stable operational cash flow, with a continued focus on acquisitions and market expansion.

Solid Order Growth Amid Market Challenges

In the second quarter, Troax Group demonstrated resilience with a 6% increase in order intake year-on-year, despite facing persistent market headwinds. The company reported an overall revenue growth of 5%, buoyed by acquisitions—most notably the contribution from Garantell, which accounted for approximately 9% of the revenue growth. The mixed market demand reflects varying performance across regions, with notable increases in the U.K. (15%) and the Asia-Pacific (APAC) region (9%). However, the Nordics experienced a sharp decline of 12%, indicating market challenges particular to that area.

Financial Metrics: Mixed Signals

For the quarter, the adjusted earnings per share (EPS) dipped from EUR 0.16 in Q2 2023 to EUR 0.14, hinting at the impact of lower organic volumes and one-off costs. The EBITA margin held at 16.8%, reflecting a 7% decrease, primarily influenced by the dilution from the Garantell acquisition and lower volume absorption in production units. Despite these challenges, the company's net debt-to-EBITDA ratio remains healthy at 1.1x, which is still on the low end and indicative of a robust balance sheet capable of supporting future growth.

Operational Cash Flow: A Positive Trend

Troax reported a sequential increase in operational cash flow compared to Q1 2024, although it dipped year-on-year due to an increase in working capital. This uptick in cash flow is an encouraging sign, reinforcing the strength of the company's operational efficiency. Comparatively, working capital has shown stability with a slight increase to 20.5% of sales, further asserting the company's manageable financial structure during this turbulent period.

Regional Performance Highlights

Examining performance by market, automotive is displaying positive momentum across both North America and Continental Europe, albeit with some declines in other sectors. The construction sector in the Nordics continues to struggle, reflecting a negative order intake of 12%. Troax's global presence is vital; while the U.K and APAC presented growth opportunities, the company's strongest markets remain under pressure from slower construction activities coupled with mixed industry dynamics.

Future Outlook and Guidance

Management expressed cautious optimism for the upcoming quarters, especially in automotive, suggesting sustained demand may bolster performance moving forward. However, the construction segment remains a potential drag on overall results, with expectations of no substantial improvements until at least 2025. Additionally, Troax aims to advance its strategic acquisition agenda in specific interest areas such as Active Safety and expansions within Eastern Europe, emphasizing a selective approach to maintain profitability and reduce dilution risk from new acquisitions.

Navigating Challenges Ahead

Looking ahead, the combination of high interest rates and potential economic recession risks poses challenges for customer project decisions. Nevertheless, Troax remains well-positioned to capitalize on opportunities that may arise from necessary investments in their sectors. The management is hopeful that stabilizing interest rates will promote a more favorable investing environment, with a focus on selectively increasing order volumes and enhancing operational efficiencies.

Earnings Call Transcript 2024-Q2

[Martin Nystrom, executive]

All right. It's 4:30. Good afternoon, everyone, and welcome to Troax Group interim report for the second quarter. My name is Martin Nystrom, and I'm since 1st of June, President and CEO of the Group. And together here with me today is Anders Eklof, who's the CFO, who will help me to present the numbers for the second quarter.

We will make a short presentation of the quarter. We'll start with a short presentation. Afterwards, we will end up with an opportunity to ask questions in the Q&A towards the end of the call. So without further ado, we will get into the quarter for us.

If I summarize or if we summarize the second quarter during the year, our order intake grew by 6%, and we grew despite some continued market headwinds. The order intake grew in total by 6%, and that was supported by structure of 9%. The revenues grew by 5%, in total where structure was 8%.

We experienced a mixed demand picture in the quarter with the different regions developing in different directions, and I'll come back to giving some more light and shedding some more color to that in the next page. But notably, we had a positive development in the U.K. as well as in APAC, even though that was from lower levels.

I think despite the market headwinds and also some higher SG&A costs during the quarter, mainly one-off nature. I think we show that we have a resilient EBITA margin despite the lower volumes and the EBITA margin ended up at 16.8% in the quarter.

Also, I think, which is positive is that we had a solid operational cash flow, which gives us continued strength and our balance sheet continues to enable both acquisitions as well as organic investments. And we were now at a net debt-to-EBITDA ratio of 1.1x.

Also notably in the second quarter, which I think we are happy about is that we -- after the second quarter, we have now signed and closed the acquisition of our Czech Republic distributor, which enables us to grow further in Czech Republic and continued growth in Eastern Europe.

If we then take a look at the market, and this is year-on-year quarter 2 organically, and this picture shows the different segments that we're in, the main ones. So we have automotive, warehousing, construction, process industries, food, pharma. And in fact, we do serve a lot of industries, and that's what you'd find in the other column.

If we then look at the different developments, so we have sorted the development into areas where we see growth, areas where we see -- where we're somewhere hovering around 0, there is single-digit decline or a single-digit increase. And the orange arrows represent areas where we see a steeper decline. And equally on the positive side, the green arrows represent a positive development.

So if we go a bit into the different market regions. So in Continental Europe being our largest geographical segment. We had a positive and good development in automotive. Our warehousing continued to be flat and stable, although at a lower level comparing to the peak years we experienced before mainly '21 and '22. We see the construction segment developing and declining and we have a -- process is stable, and we see a general weaker demand from other industries.

So all in all, in Continental Europe, we experienced minus 4%. For North America also with a negative growth of 5%. Also here, we see -- we had a good development in automotive, while the other segments were pretty flat.

The Nordics, we as such -- similarly to quarter 1, we also had a decline. And we see -- when we compare year-on-year that the construction industry, and this is mainly new production property is -- was a bit weaker in the quarter as well as general demand in the other industries. So Nordics has an order intake year-on-year minus 12%.

U.K., as mentioned on the previous page had a 15% increase, and we saw good development in the warehousing segment. But also in the process as well as other segments. So all in all, a very good and promising development during the quarter in U.K.

And last and in fact, also least, we had a good 9% order intake growth in new markets where APAC was the main driver for that. So all in all, this then takes us to a minus 3% organically in the quarter.

If we then look to our order intake, we went from EUR 65.4 million to EUR 69.6 million, plus 6%. And if we look to how that's distributed, we had minus 3% organic growth and 9% on structure. I think overall in the quarter, given the market conditions and circumstances, I think we should be pleased with the minus 3% organically. And of course, it's also good to see our latest acquisition, Garantell contributing well to structure and top line growth.

If we move to revenues and revenue development, we got from EUR 68.5 million to EUR 71.9 million, so that's a 5% increase. Minus 4% from organic growth and acquisitions stood close to 9% growth year-on-year. Also here, I think we are -- should be -- given the circumstances, recently pleased with the quarter.

Moving over to EBITA development, where we reported 16.8%, that represents a minus 7% development. Here, I'd like to say that we have a dilution from structures, our latest acquisition Garantell, which impacts the like-for-like comparable with minus 0.7% in the quarter. We're Also impacted by lower organic volumes, which leads to under-absorption in some of our production units.

And also, we had higher sales and admin costs. And here, I'd like to point out that the lion part of this are of one-off nature related to specific customers and warranties. So it's not something that we would see being repetitive and in that sense. Also I think it's good to see in this environment that we're having a sequential improvement from the first quarter.

So after hitting the key points on the P&L, I'd like to hand over to Anders to take us through the -- some of the key financial developments.

[Anders Eklof, executive]

Thank you very much, Martin. On the right-hand side on this slide, you can basically see what Martin has already mentioned, so I will not spend some time on that. But in total, you can see that order intake is up year-on-year 6% and revenues is up 5% year-on-year, including acquisitions.

If we look on the left-hand side of the presentation, net debt versus EBITDA is up versus Q2 of last year from 0.7x to 1.1x, and that is driven by the acquisition of Garantell that we made in December of last year.

And also, the adjusted earnings per share is down a little bit from prior year. It was EUR 0.16 in Q2 of 2023, and it's now in this quarter EUR 0.14. Next, please.

Working capital development is something that is new to you, but it's showing we are measuring ourselves when it comes to the controllable working capital, meaning accounts receivables, accounts payables and inventory.

And you can see the comparison to Q2 of last year, where we had EUR 57.6 million in working capital. We are slightly up in Q2 of this year, 2%, so very stable, I would say. And we also make a comparison towards the sales. And here, you can see that we have decreased a little bit in comparison to the sales number from 21.1% of sales in last year to 20.5% in this year. So overall, I would say, a very stable and solid working capital structure.

Next, please. Net debt development, I already mentioned that it's up. Usually, you have been around for quite some time now. You see that net debt tends to go up in Q2 due to the dividend that is made in early Q2 of every year. So still 1.1x is very, I would say, on the low end. So we have a robust balance sheet for future expansion.

Next, please. And last but not least, operating cash flow. Cash flow from operations is a little bit down compared to Q2 of last year, but sequentially, it's significantly up. And I can say the driver behind the decline compared to Q2 of last year is that in Q2 of 2023, we had a decrease in working capital. And in Q2 of 2024, we had a slight increase. So that's basically the change between the quarters year-over-year. But again, it's a good sign to sequentially increase the operating cash flow.

And then I think I hand over to Martin again.

[Martin Nystrom, executive]

Thank you, Anders. And then to conclude the presentation part, again, coming back to the summary. We see the order intake growth despite some headwinds organically and which has then been compensated by structure, of course both top line roles. We see different segments and different markets developing slightly differently. Some more positive than others.

Generally, I think we experienced a pretty stable but lower activity and demand level during the second quarter, similar to what we saw in the first quarter. We had a resilient EBITA margin despite the volumes, and we continue to deliver a solid operational cash flow.

And with that, I'd like to remind you why we exist in our purpose, which is, caring for everybody's peace of mind in everyday safety, and that's what we're committed to delivering to our customers every day through the -- through our product offering in Machine Guarding, Warehousing, Property Protection as well as Active Safety.

And with that, I'd like to get to the Q&A session. [Operator Instructions]

[Martin Nystrom, executive]

So we will start with Gustav Berneblad.

[Gustav Berneblad, analyst]

Maybe just to start off here, very, very clear with all the arrows and so forth. But with the automotive investments both pointing green in the U.S. and in Europe. I mean, looking at this development and also looking ahead in what you see in the pipeline, is this a demand trend that you expect to continue also going forward? Or how do you view it?

[Martin Nystrom, executive]

I think in general, we have -- we were a bit fortunate with our customer base in the second quarter. I'm not sure there is too much conclusions to draw from automotive more in general. I think when we look at our customers' activity and plans and projects. Also going forward, I think we have a robust pipeline and the demand regardless whether it's for combustion engine cars and passenger or if it's EV. So I think from that point of view, we are -- we continue to see good demand from that segment and those customers.

[Gustav Berneblad, analyst]

Okay. Perfect. And then maybe if we jump to housing construction in the Nordic. I mean if we sort of assume that it's bottoming out now or so, how many quarters would you say that we still should expect this negative trend for you given your sort of late cyclicality?

[Martin Nystrom, executive]

Yes. I think a good way to look at that is you can probably look at apartments started up and then the cycle would be 18 to 24 months until we get into the chain. So if you look a little bit to start building of apartments, it's -- so that means -- if you translate that into slower start of apartments, mainly then Sweden, you probably would probably see -- we won't see an improvement in -- or a material improvement from that point of view during 2025, at least.

So -- and probably also '26 will be impacted. That being said, Gustav, I think there is also the renovation piece, which follows a little bit of a different -- you could say, it has a different dynamics, and it's more stable. And that's also a significant part of our Property Protection business, especially in the Nordics and Sweden, in particular.

[Gustav Berneblad, analyst]

Okay. That's clear. And then maybe just the final one here, for the Automated Warehouse. I mean you have predicted or at least Thomas has previously -- our recovery late this year, early next year. Is there something that has changed there?

[Martin Nystrom, executive]

Yes. Not really. I think we're pretty much on the same -- very much on the same page with Thomas on that one. I do think though that the market activity as such is starting to be reasonably -- so the market is starting to become reasonably active in particular countries.

We saw that in Q2 that there is pockets where it improves a little. That being said, I think we're still very far away from the boom years '21 and '22, where we had a lot of the customers making significant investments. So it's the recovery this time where it's a lot more cautious than what we saw back in a few years back. So I think overall, I share the picture presented previously.

Thanks, Gustav. Then I will trying to -- say -- next question would then be from Zino.

[Zino Engdalen Ricciuti, analyst]

Zino from Handelsbanken here. I would just start off with a follow-up, you have -- or at least your predecessor has talked about some large orders from the automotive in North America, and we would see some of those orders probably coming back sometimes after summer, would you say that has changed in any sense?

[Martin Nystrom, executive]

No, it has not changed in any sense. If we look at it from the perspective of first half of the year, so H1 versus H2. I think we will see -- we will now slightly stick with our view and guidance on that, particularly so in North America.

[Zino Engdalen Ricciuti, analyst]

Okay. And in the last conference calls, there were also some talk that request for quotes had come up particularly towards the end of the quarter and you say now that it is some more activity. Would you say that it's more towards the -- so to say, larger projects? Or does it more wide across your customer base in those pockets? Or is it singular customers?

[Martin Nystrom, executive]

Probably say it's in -- I think it's a mix of somewhat larger projects as well as a volume of projects as well, even though they might be smaller. I would say that it's more specific customers in specific regions where we see a bit more activity rather than something that is across the board, so to speak.

[Zino Engdalen Ricciuti, analyst]

Okay. And on a similar topic where you highlight that customers are cautious due to macro factors, and one of them have, of course, been interest rates connected to inflation, we've seen that coming down now. But on the other hand, economic risk for an economic recession has increased. How would you think about the combination of those 2 playing out regarding customer projects?

[Martin Nystrom, executive]

I think, first of all, it's a super good question. I think we see that after, if we take some of the political risks, I think we see that there would be signs of decision-making starting to take place. Of course, we have a main election coming up in the U.S., which is -- might be impacting how our customers think and place orders and how eager they are to move forward fast.

At the same time, I think if we look at the main customers and the main projects in there. I think there's also a need to invest. And some of those investments might either be driven from demand and that there needs to be new capacity. If we take automotive or warehousing is a good example of that. But there might also be investments that are in that sense, unavoidable.

So even if the customers are experiencing higher interest rates and slightly lower activity level at there and might even be positive from our point of view in terms of that it's a good time to make some of those investments.

So it plays out a little bit differently in the different segments, I would say. And also varies a lot by customer. Hopefully, if we see the interest rates stabilizing a little bit, we might get into something that is generally a little bit more positive going forward. But based on Q2, I can say that we have experienced that. So that's more of a hope from my end than anything else.

[Zino Engdalen Ricciuti, analyst]

Okay. Very good. And just lastly for me. Can you give some more context to that EUR 1 million one-off in the SG&A? Regarding -- was it -- How do you see it amongst how many customers was based on geography as such?

[Martin Nystrom, executive]

Yes. No, it's -- this is mainly related to some -- how would I put it, all since mainly in the U.S., so it's sorting some warranty claims, not many, but material. And to that, there is also some cautiousness on bad debt, which might be recoverable in fact. But it is now in Q2.

Thanks, Zino. We'll move over to Anna Widstrom.

[Anna Lindholm-Widström, analyst]

So a few questions from my side as well. The first question is regarding pricing. I think given the lower volumes that you have, how is your pricing currently? Are there any increases or decreases?

[Martin Nystrom, executive]

I'd say in the second quarter sequentially versus the first quarter, I would say that the price level is very stable more than anything else.

[Anna Lindholm-Widström, analyst]

Okay. Great. And looking on the market mix, does that affect profitability for Troax, for example, is there a negative effect on profitability as the Nordics and Continental Europe are slightly weaker, while we see new markets, for example, being a bit stronger.

[Martin Nystrom, executive]

I'd probably say, I wouldn't say that at this point, material given the changes. Anders, would you like to chip in on this one a bit?

[Anders Eklof, executive]

I wouldn't -- I agree with you, Martin. There are no material changes in profitability with this shift in markets, in geographical markets.

[Anna Lindholm-Widström, analyst]

Okay. Great. And could you tell us a bit on how Garantell is developing, what the focus is for this business short to midterm?

[Martin Nystrom, executive]

Yes. No, short term, absolute -- short term, first of all, I think the development in Garantell has been -- I would -- in my opinion, are very solid, given the difficult market development, which is at the low point. So I think given the circumstances, Garantell has continued to develop well.

When it comes to mid longer term, we are -- we're in the process of making them a Troax Group citizen, i.e., how we collaborate inside the group, how we get the offering all together in a smart way, sharing and learning best experiences and, of course, also getting relevant processes and ways of working a bit closer together. But that's a journey that we have embarked on since we closed the deal in December. Which would hopefully be both beneficial for collaboration, but also for eventually some financial results and profitable growth.

[Anna Lindholm-Widström, analyst]

Okay. Great. And looking into other new territories such as Active Safety and Data Centers and so on, what is happening in these areas? And how is the activity level?

[Martin Nystrom, executive]

Yes. Active Safety, there's a lot of interest in that. I think we've built a solid good pipeline, a lot of relationships. That sales cycle is a little bit longer than what we're used to when it comes to our traditional offerings. So I think we're starting to -- we've done a lot of good things and have a lot of activities. And my hope is that we will start to see some more and more material conversion going forward without being able to be more specific on exactly how much and by when.

But generally, I think it's developing solidly overall or even good. If we move to Data Centers, also a lot of activity and I think some good progress made in terms of our readiness to take part in that market. And that's also something I'm very optimistic about, if we take it for the midterm, you could say. And I think an area where I think we can -- in which we should be and also help growing the Troax Group.

[Anna Lindholm-Widström, analyst]

Okay. And my last question is on M&A because you mentioned a good appetite for acquisitions. Could you maybe remind us of your focus? And if there is additional risk for continued dilution on operational profitability in new acquisitions? Or are there possible targets with similar profitability level as Troax had ahead of Garantell.

[Martin Nystrom, executive]

Yes. I think on the acquisition agenda, I think it ties very much back to our strategy, which then is -- continues to be making core stronger and help consolidation where that makes sense in different -- in our different regions. I think we're also looking to expand the product portfolio and offering a little bit in a few different areas.

And to that, I do think that there might be more to do on the acquisition front on Active Safety as well. So I'd say those 3 areas are still of interest.

Margin-wise, I do think that we are aiming to pick -- to be selective when it comes to acquisitions. So I think from a margin point of view and dilution point of view, we would most likely aim at least at the level where Garantell is and preferably a little bit better, if possible. It depends a little bit which targets and companies we acquire and where they are on their respective journey at the time when we might strike a deal.

Wonderful. Thank you, Anna. And then, it's time to -- try to let Simon Jonsson in.

[Simon Jonsson, analyst]

Yes, just a follow-up on the one-offs. How confident are you that there will be no similar costs in H2, or is there any other types of costs you could flag?

[Martin Nystrom, executive]

When it comes to the customer-related one-offs that we had now in Q2, I think we are, at this point, not aware of any skeletons in the wardrobe, so to speak. So from that point of view, I think we feel confident and comfortable that we won't have a repetitive -- this is a repetitive thing. I think it's isolated. So that would be -- that would probably be my view on that. Then I guess, it's difficult to promise what the future holds, but I think we're good from one-offs when it comes to this type of one-offs.

[Simon Jonsson, analyst]

All right.

[Martin Nystrom, executive]

You shouldn't be expecting these type of one-offs as a recurring item in our results.

[Simon Jonsson, analyst]

And next, also to follow up on Garantell. How is Garantell really performing? I think Thomas talked about around EUR 30 million in sales and it's -- H2 would be similar to H1. I think it adds up to EUR 25 million, EUR 26 million, suggesting a decline of around 15% organically. So maybe you could talk about that organic underlying performance load.

[Martin Nystrom, executive]

I think Garantell is -- if you look at Garantell is very much exposed to Warehousing and to some extent, also Property Protection and to some extent, Machine Guarding in our language. I think Garantell is performing equally as the group overall when it comes to these market segments. And I think it's very much in line with the market. So not sure I fully followed your math. But Garantell is, from a year-on-year comparison, in the single-digit decline order intake and sales wise, if we compare to '23.

[Simon Jonsson, analyst]

Okay. And then Finally, so I'm struggling a little bit how to read your comments on the market. I think on where you're talking about sort of how pleased you are with only declining 3% organically, which suggests that the market is very challenging. And at the same time, you talked about some good activity in key areas. So perhaps you could elaborate a bit on what you expect here in the coming quarters?

[Martin Nystrom, executive]

I think we're -- I think you're right in saying that our marketing has been challenging overall in many places. Obviously, we singled out the property in the Nordics being specifically weak. I think though that in different segments and in different regions and with different customers, we see a very different appetite to run projects and also place orders and take our deliveries.

So I think the main message is that it's -- overall, it's still a very challenging market. Hopefully, we'll get to a point where that turns a little bit and helps us instead of it works against us.

Then I think we -- so overall challenging demand situation. A few good bits and pieces here and there. I think we have had a good activity on the automotive side, which we had in the quarter, which we believe will continue at least for the near term. And then obviously, we have the construction segment in the Nordics, which will continue to be challenging for quite more quarters to come.

Wonderful. Thank you, Simon. Then it is Daniel Lindkvist.

[Daniel Lindkvist, analyst]

So I can't really let you guys go on the Garantell just yet. So if we make a really easy exercise, if you just for the seasonality part in the business, in a normal year, which would be the biggest quarter going down to the smallest quarter, everything else equal, not talking about 2024.

[Martin Nystrom, executive]

Anders, would you mind?

[Anders Eklof, executive]

Sorry, can you please repeat the question, sorry?

[Daniel Lindkvist, analyst]

Yes. So the question is basically, If we go for the normal size of the quarters, which is normally the biggest quarter in just an ordinary year for the Garantell. Is Q4 the biggest quarter, followed by Q1, followed by Q2, followed by Q3? Or is it -- what type of order would you put them in, in a normal year, just so we get the seasonality? Because I was under the impression that Q2 was rather fair quarter for the operation.

[Anders Eklof, executive]

Yes. I don't have so much history in regards to Garantell. But if I look at the different businesses within the legacy Troax Group, I don't see big seasonal differences. I agree that Q2 is normally a rather strong quarter. Q1 is a rather perhaps it's always -- usually it's a slow start of Q1, which means that Q1 is a little bit weaker than the other quarters. But I agree with you that Q2 is from a Troax Group as a total perspective, normally a good quarter. And I don't see why Garantell -- I don't have the history, but if you ask me right now, I don't see why Garantell would be any different from the rest.

[Daniel Lindkvist, analyst]

Okay. So normally, I mean, you have a slow start to Q1, you have a slow end into Q4. You have the summer season in Q3, so normally Q2 would be maybe one of the best quarters, maybe apart from Q4 then in a normal year. So just to get the grasp on it. So but -- so then just looking at the order book conversion then, I mean, we're used to converting -- or converting order books in Troax. And with the Garantell, I was under the impression that the order book was even shorter than what it normally is in Troax.

And then you had a [ 7.2 ] order book going into the quarter. You get some orders normally during the quarter as well, was the order book longer than normal when you entered the quarter, so we have some that has been pushed into Q3 out of those orders? Or how should we view things just to get a grasp on it and get some perspective on the Q2 number?

[Anders Eklof, executive]

First of all, I can say, I'm not aware of any long orders. I mean -- so that would shift the order to shipment ratio, so to speak, for Garantell. So I'm not aware of any specific changes there.

[Daniel Lindkvist, analyst]

So normally, you would expect the [ 7.2 ]to be delivered during Q2 and then some that entered in the quarter in -- on the normal circumstances?

[Anders Eklof, executive]

Yes.

[Martin Nystrom, executive]

Conceptually speaking.

[Daniel Lindkvist, analyst]

Yes. Okay. Okay. So it was a bit slower with converting the orders for some reason in this Q2 then?

[Anders Eklof, executive]

Yes.

[Daniel Lindkvist, analyst]

Okay. Cool. I guess we'll all learn the Garantell business with time. But since everything else was spot on in the report and Garantell was a bit of the outlier here. We're still learning so I just tried to get as much as I could from you guys. Perfect.

[Martin Nystrom, executive]

I think perhaps, Daniel, to add a bit to Garantell, I think the what makes perhaps the -- if we speak about Garantell in isolation, what makes Garantell a bit more perhaps volatile is that the customer base structure and mix. So the mix between larger projects, larger order for a couple of specific customers that proportion of the Garantell business is a little higher so that specific customers can have on the margin a bit bigger impact than it has on the Troax Group.

[Daniel Lindkvist, analyst]

Okay. But should we just -- end to this, should we expect that some of the orders has not been -- you haven't lost the orders, so they have rather been pushed ahead and will be delivered at a later point and/or what's the best guess here?

[Martin Nystrom, executive]

Now that -- I think that's -- your understanding is good.

Thanks a lot, Daniel. Thanks.

And that was the last question during this Q&A. So with that, I suggest that we end the call. Thanks so much for calling in and showing interest in our quarter report, and see you in a quarter's time again. Thank you, and bye-bye.