Troax Group AB (publ)

STO:TROAX

Earnings Call Analysis

Q4 Results Reflect Market Challenges but Maintain Stability

In Q4 2023, the company observed continued low market demand, notably from Automated Warehouse customers, a trend initially spotted in 2022. This period was particularly challenging for the building sector in the Nordics and North American automotive, both expecting to stay subdued into 2024—one with a predicted sustained low demand and the other anticipated to recover in the first half of the year. A 7% revenue decrease year-over-year reflects a 5% dip in volume, slightly offset by pricing. Despite this, existing and new customer confidence remained strong. The year closed with a stable steel price, contributing to satisfactory operating margins despite volume shortfalls. Adjusted EPS was EUR 0.16. Prospects for 2024 include gradual market normalcy, supported by an acquisition poised to bolster future performance.

Overview of Troax Group AB Q4 Financials and Operations

Troax Group AB has experienced some shifts in their market segments during Q4 2023. Machine Guarding accounts for 64% of turnover, slightly down from 65% the previous year, while Warehouse Partitioning remains steady at 24%. Property Protection comprises 12% of turnover, with the rest attributed to segments such as Automated Warehouse and new ventures like Active Safety. A strategic acquisition of Garantell was made in December, which is poised to enhance the company's portfolio. Troax maintains a robust net debt position at 0.9x EBITDA, well below the threshold of 2.5x and highlighting its solid financial health.

Performance Analysis and Regional Developments

Regionally, Troax saw mainland Europe's share of sales slightly diminish, while Nordic and UK regions presented increased activity, notwithstanding some large projects in the UK that ceased in 2023. New markets are burgeoning and align with projections. Even as Automated Warehouses underwent a downturn due to changing consumer patterns, excluding this segment, the core business continued to grow. However, overall order intake and sales reduced compared to prior years, marking a deceleration from previous peaks in 2020 and 2021. The company has returned to a more sustainable growth path with improved profitability and margins, indicating a successful adjustment to the post-peak environment.

Financial Metrics and Shareholder Rewards

Troax's financial health is further emphasized by increased EBITDA margins, which are considered good despite challenges in sales and order intake volumes. Moreover, the company's confidence in its financial stability and prospective growth is underpinned by the proposal to the Annual General Meeting for a small increase in dividends, ensuring that shareholders can partake in the company's success.

Earnings Call Transcript 2023-Q4

[Operator]

Hello, and welcome to presentation Troax Group AB Q4 Report 2023. My name is Melissa, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions]I'll now turn the call over to Thomas Widstrand. Please go ahead.

[Thomas Widstrand, executive]

Thank you very much. Thanks for the introduction, and thank you for listening in. As usual, I will follow it with the presentation, which should be on our webpage, so Troax.com, and you will find it under the headlines of Investor. And under Investor you will find a report. And obviously the report that we are talking about today is the fourth quarter. I think it's only this time on the webpage in English because there were some issues with the Swedish one. So if you have any problem with the Swedish, you have to contact me later, if you need some translation or so. But I will follow this pattern or this structure. But as usual, I don't think you will have any major problem to follow my comments, even if you don't have access to this report.So I'll go straight into the presentation and for those who are following it, I will jump quickly to the third page because there the introduction of what we are doing can be seen. The biggest segments that we are working with in Troax is what we call Machine Guarding. And for 2023, we had 64% of our turnover in that part. The year before it was 65%. So I wouldn't say that it's changing a lot. But as you see from the picture, we are obviously supplying solutions for customers who have some sort of potentially hazardous machines who can then create problems for people who are working in this environment.If we go to the next page, we come to the next segment which we call Warehouse Partitioning. And it was around 24% of our turnover this year. What you see from the picture here is also what we do. We sell a lot of solutions for people who are building warehouses, everything from traditional warehouses where we supply everything from shelves and back racking or anti-collapse systems to dividers what you see down in the right-hand corner of this photo. And what I will normally discuss a little bit later is a combination of Machine Guarding and Warehouse Partitioning, which we call Automated Warehouse, which is a combination of [indiscernible] warehouses which is the primary installation vehicle. But we normally use more Machine Guarding because the safety levels are higher than in an ordinary warehouse.Then I jump to the next page, which is called Property Protection. And as you see from the picture there, we're not talking about hazardous goods or hazardous areas, but we're talking about simply then that people like you and I, we, of course, in our cellars, especially in the northern part of Europe, we want to contain our bicycles or skis or something, some sort of enclosed cage when we don't use it. So in the cellars, or in some cases the attics, these are then being installed. This is approximately then 12% of our turnover in 2023.Next page is an example then of the Automated Warehouse. And we have, let's say, [ sub saying ] there called safety on all levels, which obviously means then that a lot of our big customers here, they do very big installations and in many layers of shelves, which they install, and normally need both the shelves, which is more, or I would say, of a commodity, and then they need these kind of safety levels, which is also then combined with some sort of sorting equipment or transport equipment, which potentially then could be dangerous for people who are working down. This I think we do in a quite successful way, even if, which I've said now for some time, the demand in this, let's call it, subsegment called Automated Warehouse, is not so high at the moment since we as consumers are not buying too much from ecommerce compared to before.Now we're getting into something also, which is for us a bit new, I've talked about a couple of times. But if you look at the next page, which is called Active Safety, where we then actively prevent accidents. We bought a small company in Spain 1.5 years ago, which then uses sensors on people. And then there is a sensor also on the forklift truck, which means then that the forklift truck will automatically slow down if they approach then someone who is in the vicinity, even if the person cannot be seen. And this is something then, of course, which we are working with actually right now. And the idea is, of course, then that we go to customers who are already buying our, let's say, core of our solutions, and we add this potential add-on in order to become an even more fully-fledged, so to speak, solution provider for these kind of customers within this segment.If you allow me to jump to the next page, we have the, what we call, the year in brief, some sort of summary. And as I said before, it has not really changed a lot, but you see then that if you look at the first chart, you have the sales per region, and you see then that actually mainland Europe, which is, I'll call it Europe, excluding U.K. and the Nordic regions, actually then diminished a little bit, whereas the Nordics and the U.K., is then increasing -- not U.K., but the Nordics is increasing. So also U.K., because we've had a number of big projects in 2022 and also before that. That has not been present in 2023. Partly this is due to the lack of demand with the Automated Warehouse. U.K. can have a lower demand in 2023. On the other hand, we have New Markets which are increasing. And even if it's still on a low percentage of our turnover. Our aim is, of course, this should continue to increase. And for 2023 it's increasing then with a few percentages, which is in line with our expectations.Going down to the figures themselves, which you already have seen. Unfortunately, we have then seen a reduction of the order intake and also of the sales compared to 2022. And that is because during '22, we had still a number of these projects for Automated Warehouses that were delivered and invoiced, and those we haven't had for 2023. But if you exclude the influence of Automated Warehouse, which will come back at a certain stage, I will touch on this a little bit later, then I would say that the core of our business is still growing also in 2023, albeit not on any impressive figures. But the core of our business excluding this is growing in 2023. And that probably shows a better, let's say, description of how we normally are developing, because the huge increase which we had during 2020 and 2021 coming from [ Poznan ] and the people who were investing a lot in these Automated Warehouses, was not, as you know, long-term sustainable. So we had a big peak in 2021 and then, of course, we got a bit of a stabilization in '22 and a reduction in '23. And this is what makes the figures show a little bit more negative, despite the fact that we, over a long period of time, have had organic growth in the range of 8% to 10%, or even 11% over a business cycle per year. But the positive thing is, of course, then that we already have improved our result both in absolute terms and also in margin.So I think we are more or less back now to where we should be, both in the gross margin and also on the operating margin, especially seen on the EBITDA level. So with a little bit more volume, I don't think, we would have had any problem to exceed the targeted 20% for 2023. Now, we ended up with 90.6%, which is not exactly where we want to be, but I still think it's on the acceptable level. So regarding dividend, which also we'll come to, as you see, there is a proposal for the Annual General Meeting to do at least a small increase of dividend. And I think that goes without saying then that this explains [ a little bit ], and that both the Board and the management in the company sees that there are good potential for future growth and, of course, for future growth in earnings.With this, I jump to the next page, which is more of a summary of the long-term figures for those of you who have not been around. So we just put in 2023 in here, and I've already explained what happened, I think, in '23 compared to '22. So I don't go into that in much detail. But you see that on the result side it's going up, whereas then on the turnover side, it's going down a little bit.With this, I jump to the next page called financial targets, and it's more or less some sort of summary of 2023. So if we look at the organic growth, we should have an organic growth, which is, of course, higher than what is the long-term market trend. And the market trend or the market demand is expected over a business cycle to increase with some 4% to 6% per year. It has not done that for 2023. I think in the best of cases it's been 0, but because of our dependence on the Automated Warehouse, it's actually decreasing this year.We are close on the operating margin, which is the next bullet point. And on the capital structure, you will probably know also that we have a very good net debt situation in relation to EBITDA, so we should not exceed 2.5x. And despite the acquisition, as we did in December, of Garantell, which for us is good potential strategic investment, we are at 0.9x now at the end of the year. And regarding dividend proposal is to pay out approximately 54% of the net profit of the company.So going to some more oral comments called summary of Q4 2023, which is the next page, I would say that Q4, if we take that a little bit isolated, is also characterized by a continuation of the lower market demand that we have seen during the whole of 2023. And this is then mainly, then again -- sorry to repeat myself, but this is mainly then coming from this development with Automated Warehouse customers. We started already in '22. We noted a stabilization in Q3, and it has actually continued, but on a low level also in Q4. But in Q4 then we were a little bit negatively hit by 2, let's say trends, or maybe trend is a bit too early to say, but there was a lack of activity, especially on the order side, in the building sector in the Nordic region. And that's something which we have seen coming around the corner since obviously then the newbuilding in the Nordic areas and also in the other part of North Europe, where we are strong in this area, has more or less diminished with substantial percentages compared to before. And that will, of course, I think, may be maintained during 2024. So we have no reason to see any immediate improvement there. I think, on the other hand, we're going to see sustainably low demand during '24 for this sector. However, I think we have other possibilities to compensate that. But just talking about building sector, that will be a little bit weak for '24.And then, which also is not quite common for us, there were a little bit absence of bigger project orders generally in the Q4. And I especially would like to point out that the automotive demand in North America, which previously has been on a rather strong level, was quite weak in Q4. It was better in Europe for automotive, but for North America it was, I would say, rather weak. And then we do expect it to come back now in Q1, Q2, but again, for Q4, it was a little bit of a weak point, I would say, from an order point of view. Again, I want to repeat that the rest of the market generally seemed to continue to have stable activity level. We don't see any reason that there should be a big lack of demand, with the exception of the building sector, which I already said, and for the automotive sector, which I've already mentioned, we think it will come back in North America, let's say, during the first half year at least.Steel price, which has been fluctuating, as you know, in the last couple of years a lot. It's rather been stable in quarter 4. And for the whole year of '23, it was actually reducing a bit. This was, of course, helping also to come back to, let's say, the level of EBITDA or operating margin that we want to have. So that's a good thing. What comes forward, we don't know. But of course, we cannot assure that this will be maintained as there are some geographical or geopolitical problems which might come up. And then it could stir, of course, this stability. But at the moment, as per the end of the year, it was quite stable on the steel price.So with this, we have shown you then that we return now not only for the quarter 4, but also for the whole year to, I would say, rather decent levels on the operating margin. Despite the fact then that we would have liked to have a little bit more volume going through our manufacturing units. We have done some reduction of costs, of course, to compensate for this, and I think has been done in a good way during 2023. But of course, if you would have been able to wish something, you would have liked to have a slightly higher volume going through the manufacturing. Nevertheless, we have achieved then the target level on gross margin.The positive, when we talk about volumes, which I already commented, was the continental Europe and also the New Markets, which were quite good, I would say, in Q4. So it's not so that it's some sort of general decrease in demand. I would say that there are some segments of the market and some geographical aspects which has to be taken into consideration, for instance, in the New Markets. I think that, without giving any forecast or anything, but I think that the demand in New Markets seems step by step over a longer period of time to improve, and I don't see any reason why that shouldn't continue to improve going forward.Adjusted earnings per share EUR 0.16. Working capital is on a lower level. You've seen this also. We've reduced to balance, of course, the lower demand within Automated Warehouse. Cash flow was strong in the quarter, even if, of course, if you look at the net cash is, of course, negatively influenced by the cash out acquisition of Garantell. And coming to that, you probably know which we have informed market that per 1st of December we acquired Garantell, Swedish-based, but we call it European-focused manufacturer of mainly anti-collapse systems and shelves. On paper, it looks like it's a clear competitor of Troax and it is, of course, in some ways. But, I would say, it complements us in a very good way. So we have different ways to market, partly it's different customer segments or customer lists. So I think we complement each other in a very good way.The acquired company then, Garantell, will maintain its brand name and its manufacturing, et cetera. So we want really to develop that as a separate organization. It adds approximately EUR 30 million in turnover, and as I already said, we're quite happy since it's complement the way of selling, the way we go-to-market. Troax is selling a lot with wholesale companies, selling a lot with advices and recommendation and so forth, whereas Garantell is selling a lot more from a small central headquarters and, let's say, being more oriented towards the customers who understand a little bit more easy solutions and they can contain their own devices in a more simple way.Talking also about what else we did in the quarter. We have finished the building work for yet another expansion then in Hillerstorp, Sweden, which still is one of main manufacturing units from a volume point of view. We are also in the process of expanding the manufacturing capacity in China outside of Shanghai. So we are closing the old factory we had there, which we had for some 10 years. And due to the fact we need to increase the capacity, we are moving to new buildings and also investing in new capacity in China, which I think is a good sign for the whole region for the future.In Poland, with Natom that we acquired, as you know, a couple of years ago, we will now, let's say, in April 2024, we will have moved all our activities to a complete new facility that we bought in connection with the purchase of Natom outside of Poznan on the western part of Poland. So the old manufacturing unit will now finally be closed, which will have a good effect in a positive way, of course, on the cost side in that company.Going to the financial highlights, I don't intend to go through that a lot. You can read for yourself. But I already mentioned that we think then that the order intake was a little bit on the weak side. Even if we don't see any general lack of demand or something which has happened, we think it's more that customers are perhaps a little bit postponing things until things get a little bit more stable or interest rates are coming down or these kind of things which, of course, influence their decisions.Gross margin good. EBITDA, I would say, was on a good level. So nothing more to say about this for the 3 months. And on the 12 months, you have a similar development. So I would say then that the figures, what we try to convey to you, being shareholders or investors or analysts, is then that it's been a rather stable development during both Q4 and the year. Nothing really big things have really happened, I would say. Let's see about '24 what will happen, but that still lies in front of us.Going to the regional development next page. And as I said before, you see for the 3 months regarding orders that we have positive development in what we call continental Europe and New Markets, whereas we have quite negative in Nordic region coming from the building sector, U.K. coming from a lack of these big project orders which mainly coming from Automated Warehouse, not entirely. And then in North America, I would say rather substantial decrease coming down from a lack of products with the main automotive companies there, where actually we are quite strong in now. And this refers mainly, I would say, for this quarter to negative development in the Folding Guard issue or Folding Guard region, whereas for Troax or Troax brand, we are doing more similar figures than compared to last year.Similar pattern we show in sales, but it's a little bit different because, of course, what you saw then in the Nordic region is now seen on the order side and that will, of course, over time hit also more on the sales side during 2024, but for the fourth quarter it has not yet materialized that much, so the figures in sales invoice is better than on the order side now. So if you look at the whole 12 months and compare that with the year before, we've had 7% decrease, excluding acquisition. I think there are maybe 1 or 2 percentages of price effect. But basically you could say that there is a 5% decrease in volume, which, of course, is nothing that we are aiming for. And we think there are good chances as soon as the market will at least slightly return to come back to the ordinary growth figures, which we are usually having.So as some conclusion, next page, there are still number of important orders in all segments, also Automated Warehouse. So we do see then that the customers have very good faith in us, and we continue to have a good goodwill in the market, and we don't see then that there's been any losses or customers that went away. Also on the contrary, I still think that the inflow of new customers is on a healthy level.Positive development in results, I already explained, despite underutilization levels in our manufacturing units, and if you exclude then the Automated Warehouse, I would say, that we've had a decent or at least a stable activity level, and we are still growing on the core, let's say, of our business, which is a good and healthy sign for the future.The expectations are that demand in automotive and also in the warehouse sectors will start to increase again during '24-'25. When we talk about the Automated Warehouse, we've been informed before by the customers, these kind of big international customers that we should expect that the projects will start in the beginning of '24. We've always, at least internally, been a little bit hesitant to say that this will probably be delayed a bit. And now I think we got confirmed that in practice for us this will probably start earliest by the end of '24 or by the beginning of '25. On the other hand, we do see there are very good potential for the demand here will come back to very good levels, perhaps not to the very extraordinary levels we had in 2020 and '21, but very healthy, and I would say, for us very interesting growth levels in the coming years. Even if we are not talking about the growth coming in '24, I would expect then that we will start to come back step by step during '25, and we did an important acquisition which complements us in a very good way.This concludes then little bit the figure point of view. So I would just round off with the more general presentation. So the growth factors are on the next one, and they are still valid. Nothing has really changed there. We do see that the increased industrial automation and the growth in ecommerce over time at least will give a healthy growth also potential for us. On-shoring of manufacturing, we see some of that coming in now in quarter 4, not to any major extent, but we do see that people in Europe are starting to move back more manufacturing, especially from Asia Pacific.Next page are production units. It's just a summary of that. Now we have just the information added on the Garantell 1 on the right-hand corner up to the right. We have just written at least the capacity for shelves. So you can see that we have a good machine capacity for further increases on this specific product unit. For the rest, it's more or less a little bit stable. I would say there are some increases here and there, but generally speaking, we have decent capacity utilization even if we wanted it to be slightly higher in some cases. And we do still have a good capacity, which means then that when the demand starts increase, we have a healthy reserve capacity for doing increases with rather short lead time.Next is just a summary of different brands that we are operating with. And I'm jumping then to the 2 pages for what is called, for a safer tomorrow, and just want to cover this a little bit, not want to put a lot of effort, again, on the same things as before, but want to draw your attention and to what will be a requirement [indiscernible] bigger companies, including for us. So the last point there, bullet point, we will start reporting according to the CSRD directive. We will start accordingly to report. Maybe this will start in 2025, but I think we will start in any case with reporting on a certain level in the 2024 Annual Report, just to get acquainted with the requirements that are put up.Otherwise the rest is more or less the same as before, and we are continuing to work I think in a structured way with both quality levels, environmental issues, and also, of course, the personnel related [Technical Difficulty]. As before, we continue with R&D. We are certified. We are protecting people, property, and processes. And I think we are a very clear alternative for the customers who want to have a fully-fledged solution provider in these important sectors, which is part of what we call safety and security, mainly safety, not so much security, but in that area. And we are, of course, in a niche of that market where we've been the original since 1955, and we intend to continue to be the leading company in this sector.So with this, I'd like to, as usual, end up my presentation, and I await eager for your questions, since we're now moving to the Q&A session before we end this little conference call. So please come on with your questions.

[Operator]

[Operator Instructions] And we do have a question from [indiscernible] with SHB.

[Unknown Analyst]

I'd just like to start or go back to the order intake. You say that you see no major decreases in demand, except, of course, the Nordic area and automotive in North America. Just in general, do you expect to see maybe more orders coming into Q1 than to Q4 for any timing effects or similar, like more short-term postponing, so to say?

[Thomas Widstrand, executive]

No. The simple answer to your question is no. I don't see that. On the other hand, there is some truth in what you are saying, so to speak, because normally we get the number of these, what we call, bigger project orders every quarter. And we had, I would say, there were a few of them in Q4. So with this in the back of your head, I would say, yes, we are expecting, in general, more project orders both in Q1 and Q2, because that's what normally comes in. But it's not related to that directly customers have postponed any projects, so it's not related to that. I think it's more maybe coincidence, or could be, of course, that customers are just postponing because what I was implying, at least, and that they were waiting for things to stabilize, or that interest rates at least starts to come down a little bit, which means then that they might be more brave to start new projects.

[Unknown Analyst]

And regarding North America, could you give kind of some indication how large the automotive area and then how the other end markets in that region is performing?

[Thomas Widstrand, executive]

I would say automotive is in the U.S., if you exclude the Automated Warehouse, which for 2020, '21, and partly during '22, was the biggest single segment in the U.S. But excluding that segment, which has had a little bit of a strange development now, in the last couple of years, automotive is the biggest segment that we have in the U.S. We are quite strong in that sector now, especially with the purchase brand of Folding Guard, we've increased sales during some years now. So I don't want to give you any direct figures, but as a segment it's quite important, and we are quite strong in that. So unfortunately, when these kind of customers are not doing a lot of investment during the quarter, you will clearly see it in the figures like this. And the other way around, when they do investments and we get orders, you will also see it in a positive way.

[Unknown Analyst]

Understood. And looking at the gross margin for the first quarter of '24, how should we think about it, given the events in this quarter and if Garantell has any mentionable effect?

[Thomas Widstrand, executive]

Yes, good question. Normally it is so that we think that this gross margin that we have right now is quite sustainable. There are no really [ price ] effects in Q4 and there are no major effects which are influencing, even if I am perhaps complaining a little bit, that I would have liked to have a little more volume going through our units. So I would say that the margins we have in Q4, and actually during Q3 also, is showing roughly where we are. It's not really influenced by neither any big negative effects or any big positive effects. So I would say, it shows plus/minus what the situation is at the moment.So going forward, without giving you, of course, any forecast, but if only the volume will be maintained on this level, and we don't get any more major lack of demand [ in the market ], I think we have very good potentials of keeping the margins on the levels that we spoke about reasonably at this level, even if the purchase of Garantell, technically or mathematically, whatever way you want to take it, will slightly reduce the margin, because these kind of companies have by definition, a lower EBIT margin. So on the whole, you can expect that everything else equal, if we are not able to compensate with improvement in other areas, the group margin can decrease with somewhere between 0.5% and 1% just because of the acquisition.

[Operator]

[Operator Instructions] And we have 1 more question coming through. Anna Widstrom from Carnegie.

[Anna L. Widstrom, analyst]

Sorry, can you hear me now?

[Thomas Widstrand, executive]

Yes, we hear you.

[Anna L. Widstrom, analyst]

Hi, it's Anna from Carnegie. Sorry. So my first question is regarding the notion that you've started to see some effects from the onshoring. Is that related to some specific segment?

[Thomas Widstrand, executive]

Yes, it's mainly to Machine Guarding.

[Anna L. Widstrom, analyst]

And my second question is regarding the Troax Safety Center. That's quite a big part of your business model. How is your focus going to be on the R&D for the Garantell group?

[Thomas Widstrand, executive]

Good question, Anna. Now, we think that we can add something on the R&D side also for Garantell. Garantell has very good products and have creative persons doing R&D. But I think our putting organizations together with a bit different backgrounds can create even better product for the customer. So not taking too much time to talk about all the details here, but in summary, I would say that I can only see huge potential in this, that we can bring out better, more efficient products for the customers, which also will be maintained from a profitability level [indiscernible], et cetera. So it's positive.

[Anna L. Widstrom, analyst]

Great. Thank you. And my last question is regarding the M&A focus going forward, because obviously you've strengthened your position now in Europe. Do you have a focus area going forward?

[Thomas Widstrand, executive]

Yes, it's naturally so that the purchase of Garantell increases the dependence on Europe. So if something interesting comes up in Europe, we will still be interested. But if we talk about priorities, it's still so that the first priority for acquisition, if something comes up, is North America. We're very keen on doing further acquisitions there for different reasons. And then coming up more and more is that seems the market in Asia Pacific is starting at least to grow a bit, even if it's a number of years behind both Europe and United States, I think we are more keen, compared to a couple of years ago, to do also some acquisitions there. So if I can just choose freely, I would say that the priorities are very clear. It's 1, North America, 2, Asia Pacific, 3, Europe.

[Operator]

Our next question is from Daniel Lindkvist with Danske Bank.

[Daniel Lindkvist, analyst]

Just a few quick ones from my side. Starting off with Garantell. Now they're entering the order book and the order intake. So how should we view that? Will their orders turn up in the order book or are their lead times shorter? And the cycle from order to delivery will happen during the quarters to a higher degree than in the other regions?

[Thomas Widstrand, executive]

Yes, Garantell is very similar to what we have in, let's say, the ordinary core business of Troax. So it's a very short time between quotes or orders to delivery. So normally, if you get an order in 1 quarter, it will be delivered in the same quarter. So you won't see any major, I think, let's say, jumps between quarters or so. You will have a rather even development from that perspective.

[Daniel Lindkvist, analyst]

And then in North America, for the deliveries with your order intake from Q3 and then deliveries in Q4, from what I find, you should have some backlog with you going into Q1 and Q2. Is that the case?

[Thomas Widstrand, executive]

That is correct, yes. It's not a huge backlog, but we have a certain backlog. So that's absolutely correct, yes.

[Daniel Lindkvist, analyst]

And you came to fill the backlog with the continental Europe and Nordics, but you still have some in the other regions.

[Thomas Widstrand, executive]

Yes, correct.

[Daniel Lindkvist, analyst]

Perfect. So, just to understand it correct then, for Garantell, you should not expect to have 1 quarter of yearly sales in the order intake or in the order book entering a new quarter.

[Thomas Widstrand, executive]

No, you will have a fairly even order versus sales invoice delivery process.

[Daniel Lindkvist, analyst]

And then earlier on, you talked about smaller customers being more active than the larger ones, and that's in this quarter as well it seems that major decisions from the bigger clients are having longer lead times.

[Thomas Widstrand, executive]

Yes. When we talk about Automated Warehouse, you're absolutely correct. This was seen also that we got orders in Automated Warehouse in Q4, but we still didn't get these big projects or big orders coming mainly from these big international customers. So it's more small and medium customers who are giving orders in this area. So that's correct.

[Daniel Lindkvist, analyst]

So, little drama as usual then in the report?

[Thomas Widstrand, executive]

Yes. I wouldn't say big drama. No, I don't think so.

[Operator]

[Operator Instructions] And as we have no further questions coming through, I turn the call back over to Mr. Widstrand.

[Thomas Widstrand, executive]

Thank you very much. I appreciate, as you know, your interest and your willingness to listen to me. And I'd like to invite you again, of course, on the 22nd, I believe it is, April, in connection with the Annual General Meeting, because then we're going to present the Q1 figures. And then, of course, I will have the opportunity to talk to you again. Unfortunately, it will be my last conference call, so I'm looking forward then to hopefully end that in a nice way. But as you have seen, I've got a very good successor, which, of course, and I will try to introduce at the same time. And I'm sure that they will continue to do the development in an even better way than we've been able to do. So thank you and looking forward to talk to you again on 22nd of April.