Siltronic AG

XETRA:WAF

Earnings Call Analysis

Solid EBITDA Despite Weak Demand, Stable 2023 Projections

Despite a challenging Q3, the company maintains its full-year guidance and proceeds with investments, anticipating a market turnaround. Financial solidity is evidenced by a 28% EBITDA margin despite high capital expenditures leading to a net financial debt of EUR 316 million. With two-thirds of sales in long-term agreements, 2023 pricing remains stable, though global wafer demand will drop by 15%. The outlook for 2024 remains cautiously optimistic with limited visibility.

Solid Execution Amidst Market Downturn

Siltronic's leadership emphasized their commitment to meeting the full year guidance for 2023, highlighting their operational resilience in the face of challenging market conditions. The third quarter reflected the expected trough of the year, with stable pricing and preparations underway for an anticipated market rebound. Investment in the company's production capabilities and product mix is on track, underscoring a proactive approach to future growth.

Financials Reflecting Strategic Investments

Despite a 14% decrease in sales quarter-on-quarter due to reduced wafer area sold, CFO Claudia Schmitt emphasized the stability of prices throughout the year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) declined by 16% to EUR 99 million, with a robust margin of 28%. Net income fell by 43% quarter-on-quarter to EUR 35 million, impacted by increased depreciation and investments. The quarter also saw positive currency effects due to foreign exchange (FX) tailwinds and effective hedging strategies.

Investment Outpacing Cash Flow

The ambitious investment strategy, which amounts to a projected total capital expenditure (CapEx) of EUR 1.3 billion in 2023, is focused on the FabNext project in Singapore and other capacity expansions. These investments, notably higher than the operating cash flow generated, have led to a reduction in cash reserves and a shift from net financial assets to a net financial debt of EUR 316 million. Despite this, the company maintains a stable equity ratio and a measured approach to managing financial liabilities.

Stable Long-Term Agreements Mitigate Weak Market

Long-term agreements (LTAs), which cover about two-thirds of sales, play a crucial role in stabilizing Siltronic's business amid weaker market conditions. These agreements help secure stable pricing and volumes, contributing to the company's continued profitability. In terms of market outlook, demand for smartphones and automotive silicon content is growing, but PC sales are expected to decline. The overall silicon market remains fairly stable despite significant destocking, which is projected to result in a 15% reduction in global wafer demand for the full year 2023.

Earnings Call Transcript 2023-Q3

[Operator]

Welcome, everybody, to our Q3 23 results presentation. This call is also being broadcast live on the Internet on siltronic.com. A replay of the call will be available on our website shortly after the conclusion of this call. Our CEO, Michael Heckmeier; our CFO, Claudia Schmitt, will give you an overview of our Q3 financials, our guidance and the current market developments.

After the presentation, we will be happy to take your questions. Please note that management's comments during this call will include forward-looking statements, which involve risks and uncertainties. For a discussion of risk factors, I encourage you to review the safe harbor statement contained in today's press release and presentation. All documents relating to our Q3 23 reporting are available on our website.

I now turn the call over to Michael for his remarks.

[Michael Heckmeier, executive]

Thank you, Verena, and a warm welcome from my side as well. We deliver what we promised. Through this commitment, the development in the past quarter and correspondingly in the first 9 months can be summarized as follows: We are fully on track to reach our full year guidance for 2023. We went through the trough this year in Q3 due to a continued weak demand as we already communicated at the end of July during our Q2 call. Nevertheless, there are stable prices. Consequently, we are going ahead with our preparations in order to get ready for the expected market turnaround. We're also investing into our global production network and product mix. I would like to continue with a quick summary of this quarter's highlights. The operating figures are again in line with expectations.

Despite challenging conditions, pricing is stable, our profitability is solid and our cash flow and financial KPIs are affected by the high investments to get ready for future growth. Our investment focused at next is even slightly ahead of schedule, and we expect the first wafers to produce soon. Amongst others, we will give you more details on [indiscernible] our next Investor Relations highlight the Capital Markets Day in London on November 13.

Claudia will now give you a deep dive into our financials before I report back with some details about the market expectations and the outlook for full year '23 and beyond. Claudia, please?

[Claudia Schmitt, executive]

Thank you, Michael. A warm welcome also from my side. Let us jump directly into the analysis of our Q3 results, which I would characterize as solid and expected in a still challenging environment. As anticipated, sales in Q3 declined by 14% quarter-on-quarter, impacted by the lower wafer area sold. I'd like to underline that prices remained stable in the course of the year despite a significant year-on-year decline in volumes and that there was no major impact on sales in Q3.

EBITDA came in at EUR 99 million, sequentially down 16%. The EBITDA margin was robust at 28%, just minus 1 percentage point compared to Q2. With lower volumes, the fixed cost dilution decreased, but on the positive side, our material energy costs were stable. In addition, we saw a tailwind from FX in the balance of other operating income and expenses in Q3. EBIT declined to EUR 46 million. As expected, depreciation increased in Q3. Net income came in at EUR 35 million, down 43% quarter-on-quarter. Due to our high level of investments, our cash and securities were significantly reduced. This led to a slight decrease in interest income compared to Q2. Overall, the financial result was slightly negative in Q3. The tax rate was impacted by a shift in the site mix. The volume reductions we experienced in Q3 mainly affected one of our fabs in Singapore, which is currently benefiting from a tax holiday.

I just mentioned that in Q3, there was no notable impact from FX on the top line, but we saw clearly positive FX result and other operating income and expenses. So it's worthwhile to take a closer look at our currency effects in general. On the sales side, our primary FX exposure is tied to the U.S. dollar, while our costs show a significant euro exposure. Changes in the U.S. dollar exchange rates have a relevant impact on our sales and earnings. That is why we have a hedging strategy in place. The operational hedging focuses on the recorded U.S. dollar position and covers up to 2 months. For strategic hedging, we have a gradual approach covering up to 18 months based on the expected net exposure. Year-to-date, we've posted FX gains of EUR 17 million in the balance of other operating income and expenses. A significant part of this is based on our hedging efforts.

For 2023, we expect an FX result slightly above EUR 20 million. Looking at our balance sheet, total assets sum up to roughly EUR 4.3 billion. The changes compared to the end of 2022 are mainly attributable to our high investments. To date, CapEx totaled EUR 944 million. As a result, our fixed asset share increased from 58% to 73% of total assets.

Consequently, our cash and securities have significantly decreased from more than EUR 1 billion to slightly above EUR 500 million. The equity ratio remained stable at 49% and financial liabilities increased slightly as we have drawn the last portion of our Singapore dollar loan in Q3. Therefore, loans amounted to a total of nearly EUR 800 million at the end of Q3. In the first 9 months of 2023, we've received customer prepayments amounting to EUR 79 million.

Total prepayments sum up to EUR 605 million at the end of September. 2023 will be the peak of our investment phase. Therefore, as already mentioned in Q2, we expect the total CapEx of roughly EUR 1.3 billion in 2023. These investments primarily cover the FabNext project in Singapore, the expansion of the crystal-pulling hall in Friday, which was inaugurated in September as well as the capability enhancements.

For 2024, we expect CapEx to be less than half. Depreciation this year is expected at roughly EUR 200 million, a little lower than communicated in Q2. To finance these high investments, we have a conservative approach in place, ensuring we always maintain an adequate liquidity reserves. The best financing picture has not changed compared to Q2, except for the fact that we have fully drawn the Singapore dollar loan, as already indicated. Finally, let's take a closer look at our cash and debt situation by looking at the bridge on the left side. End of 2022, Siltronic had net financial assets of EUR 374 million. We generated a solid operating cash flow of EUR 324 million in the first 9 months of this year, which was not sufficient to offset the high payments for CapEx of EUR 905 million and the dividend payment of EUR 90 million. As a result, our net financial assets turned into net financial debt of EUR 316 million. With this, I hand back to Michael.

[Michael Heckmeier, executive]

Thank you, Claudia. As announced, I would now like to share some thoughts about the market environment and the outlook for the full year 2023. It's not breaking news for you that we are still in a challenging market environment. As communicated earlier, the current market weakness shows the strongest market decline since 2009 with a high level of excess inventory, which led to volume shifts from our customers. The market is much more mature than a decade ago and the customer statement that the most expensive wafer is the one I don't get is valid. Therefore, we continue to expect a reliable and stable pricing environment also for the rest of '23.

Our high proportion of long-term agreements is a key stabilizing factor of our business since prices and volumes are mostly defined. LTAs cover contracts longer than 1 year and relate to approximately 2/3 of our sales. Having said that, due to our lean overall cost structure, we report a solid and large profitability despite the current market weakness. Those of you who listened to our Q2 call will know the next 2 slides. The statements on the development of the silicon market are pretty stable, just one notch up in smartphones and one notch down in automotive.

For smartphones, we continue to expect weaker unit sales, but on the positive side, silicon content continues to grow. The same is true for servers and automotive where we see nice growth. PCs are the only category to show a strong decline in '23. In total, the overall market is mostly stable. We see the other side of the coin, we are still facing massive destocking at all levels in the value chain, and this will continue to impact into '24. This is a late consequence of the supply and material bottlenecks of the past few years. There will also be some hangover of destockings into '24. This effect, which is massively affecting [indiscernible] and OEMs will lead to a decline in global wafer demand of around 15% for the full year 2023, and this is unchanged compared to our Q2 call.

Knowing that some of you like my crystal ball phrase from Q2, as it was quoted in the investor meetings and research reports quite a bit, I would like to make use of this picture again. Unfortunately, it has not cleared yet. We still do not know when we will see a turnaround in the industry, and we will not be the first to see it since the typical time lag for the wafer industry is approximately 6 months after the end market improves. Nevertheless, I would like to give you our market assessment based on our most important market channels. Memory inventory has peaked, but is continuously elevated. A positive indicator is the stabilization of DRAM and [indiscernible] prices.

Whilst the situation in logic has further improved and has moved close to normal levels, the power segment gives a bit mixed signals with rising inventories, but positive forecast for automotive, which is one of the most important client industries. We will keep a very close look on this as well as the geopolitical and economic uncertainties.

Nevertheless, we continue to be very optimistic for the medium and long-term growth driven by the megatrends, artificial intelligence, digitalization and electromobility. We are consistently preparing ourselves for this next profitable growth phase by investing heavily into our global production network and product mix, particularly to strengthen our leading-edge position. We are very pleased with the progress of a new fab in Singapore named FabNext. Here, we are even slightly ahead of our schedule and expect the first running out soon. The ramp will start as planned in 2024. To be prepared for growing demand, our focus is to qualify customers and we can rely on a very high share of LTAs of approximately 80% during the ramp phase. As already communicated, we have slightly reduced the ramp speed for '24 and '25 according to market reality. Due to the very high automation and the fact that our site in Singapore will be the most cost-efficient Siltronic fab, we continue to expect margins above 50% in the medium term, which will have a growing positive impact on our group margins. Although FabNext is the largest investment project in Siltronic history, one should not ignore the major efforts that were made to improve our product mix at the German fab in Friberg [indiscernible].

After all, every segment to third chip in Europe is manufactured in this region, which is a focus area for future chip manufacturing investments, as you know. We've invested several hundred million euros in recent years. Money well spent that will give us significantly improved product mix. The expansion of our crystal-pulling hall was officially inaugurated in September.

Let us now turn to our outlook for the remainder of financial 2023 and the year as a whole. We confirm our existing guidance and precise it on the upper range of the given bandwidth for sales and EBITDA margin. As indicated, Q4 will deliver slightly better than Q3. Therefore, and with a more clear view on the remaining weeks, we expect consolidated sales to be 15% to 17% below the previous year's record levels of EUR 1.8 billion at the FX rate of the euro against USD 1.10.

In July, we indicated sales decline between 14% and 19%. We expect our EBITDA margin to come in at 28% to 30% and therefore, on the upper end of the guidance we gave in Q2. In addition to the sales volume, inflation-related rising cost of about EUR 40 million negative exchange rate effects and the absence of the positive onetime effect from the termination fee of EUR 50 million in Q1 '22 will contribute to the decline compared to previous year's levels.

CapEx will be unchanged at around EUR 1.3 billion and depreciation slightly better at approximately EUR 200 million, as Claudia already mentioned. And no surprise, net cash flow will be significantly below 22%.

Furthermore, our tax rate is expected to be at around 15% in '23 due to the shift in site product mix. My last comments of today's conference call concerns our next highlight of our Investor Relations activities. Our Capital Markets Day taking place on November 30 at the Andaz Hotel in London.

In addition to a strategy update and detailed explanations of our midterm guidance, we will present deep dives into the wafer industry. For example, the power seg, why we will stay ahead of the curve as one of the technology leaders. Additionally, you will have the opportunity to get to know some of the key members of the Siltronic management team.

We are happy to invite all of you, and Claudia and I are looking forward to [indiscernible] in London in person. You are very welcome to submit your registration to our IR team. Thank you very much for your attention today.

With this, we close our presentation and Claudia and I are happy to answer your questions now. Operator, please open the Q&A session.

[Operator]

The first question comes from the line of [indiscernible] with UBS.

[Unknown Analyst]

I've got a few just around LTAs. Firstly, are you able to provide any color on how big a proportion of LTAs, the coming negotiation in the near term and then looking into 2024, given the tough market backdrop, do you expect any customers to be shifting away from LTAs at least temporarily. So do you expect that kind of 2/3 LTAs dynamic to shift into 2024?

[Michael Heckmeier, executive]

Thank you very much, very valid question. As mentioned already cover about 2/3 of our sales right now and in particular, 80% of our ramp of the FabNext. So that's the status quo. We look at LTA as a portfolio of agreements where, of course, some expire, some come into the game. That's a quite regular situation. In the near future, particularly in '24, no significant or major LTAs do expire. I would not see a trend of customers moving away from LTAs as it's also a huge benefit for them. It helps them also, of course, in future upswings. So I think it's a very fair actual agreement with both parties benefiting quite a bit. So we don't see a trend of change there at all.

[Unknown Analyst]

And then the lower depreciation for the full year, what's the driver there? Is it linked to the slower ramp of FabNext that you announced a quarter. So as such, should we expect depreciation kind of for that to be pushed into 2024? Or is it nonoperational?

[Claudia Schmitt, executive]

This is Claudia. I will take a question regarding depreciation. It's slightly reduced compared to our Q2 not because we are in delay or so. It's just because of the fact that with the progress of investment projects, we gained a better view on the time line and on the sequence of the start of depreciation, and that's why we use that to our best knowledge right now, which is EUR 200 million next year -- this year sorry, this year 2023.

[Operator]

The next question comes from the line of Constantin Hesse with Jefferies.

[Constantin Hesse, analyst]

I got 3. Maybe the first one, I just want to have a quick chat on the dynamic between LTAs and spot and how the contracts work is up and speaking to some of my colleagues that cover some of your competitors. And I'm just wondering if a customer of yours does in the end postpone a certain volume towards the end of the contract, but suddenly, he needs to gain access to volumes. Is he able to basically buy them in the spot market; therefore, that could have a general impact on spot prices? Or because he is under contract, you would have to get the volumes under that contract?.

[Michael Heckmeier, executive]

Great question. We do not see this pattern of behavior you mentioned especially for our large customers with pretty good visibility of their stocks. And from our evaluation of the very details of our top customers, we have no indication at all that such a pattern of behavior is occurring, as you just alluded to.

[Constantin Hesse, analyst]

That's great. And then second question would be, I mean, obviously, demand hasn't recovered yet. It continues to be quite lackluster. So just wondering, is there any risk that you see today of any slowdown from the already lowered ramp-up to 100,000-plus wafers next year, down from 150,000. Is there any risk to further downside to that at the moment? Or given the current volumes are you already seeing inventories at your customers coming down slightly?.

[Michael Heckmeier, executive]

Also from what we see, as we communicated in Q2, we tempered our ramp of FabNext. The initial plan was 150,000 per month at the end of '24. We reduced that to the language 100-plus compared now to the development of a couple of months ago, we do not see a reason to change that. So we can stick and we have customer commitment to work through the ramp and to the qualifications as we communicated.

[Constantin Hesse, analyst]

Understood. And then just a quick view. I mean, just to give us some direction here in terms of the cost dynamic into 2024, given obviously the lower electricity prices because that could obviously have quite an impact on your gross margin next year. When could we expect this here to be a bit of a tailwind for you guys? And could we potentially also see because of the lower electricity prices, lower prices in polysilicon? .

[Claudia Schmitt, executive]

Constantin, this is Claudia again. You're right. We see some positive trends in energy costs for next year. But regarding other materials, we are not able to comment on 2024 at this point in time. We will give you an update during our guidance for 2024.

[Constantin Hesse, analyst]

That's understood. Can I just ask them just in terms of how it works with [indiscernible] because you have a 5-year contract. Every year, however you do there is a certain range that you can negotiate pricing. Is that correct? .

[Claudia Schmitt, executive]

Yes, that's correct. But nevertheless, pricing is a question of demand and offering. So it's not totally depending on the development of energy prices.

[Operator]

The next question comes from the line of Gustav Froberg with Berenberg.

[Gustav Froberg, analyst]

I have 3 as well. First one is on Q4, actually. Given the structure of your contracts and your work with customers, you should have pretty good visibility already on Q4. I know you firmed up the range a little bit, but could you maybe tell us a little bit about what might drive the outcome towards either the top or bottom end of that range that you have given? What kind of contingency have you baked into that 15% to 17% guidance range. I'll stop there for the first one and then take the other ones after.

[Michael Heckmeier, executive]

And as we guide the range, of course, we do not precise it further today. So I think that's where we are. We cannot give you more details today.

[Gustav Froberg, analyst]

Okay. Then a question, looking into next year. Speaking to your crystal ball a little bit. Could you talk us through how you see the shape of the recovery in 2024. I know you said there's going to be some spillover of inventory effects into the first half, but do you expect there to be, for example, a sequential recovery each quarter in '24? Will there be a flat line and a step up? How should we think about the shape of the demand side recovery next year. And in the context of this, how are you viewing industry supply and the supply additions coming from yourself with FabNext and with yours as well? .

[Michael Heckmeier, executive]

Today, we don't guide to '24, but maybe let me give you some flavor or some color of our thinking and particularly on the market side. There is some improving positive news flow. As you know, some of our major customers did reap out better-than-expected results. Some others talk about some progress into next year and memory prices dipped bottom out, slightly increasing. So we share, let's say, a slight positive sentiment here and look, let's say, carefully optimistic into the total year '24. How that shape will look like? Is it more U? Is it more L-like, I think we cannot comment today, but we try to build as much as we know into our '24 guidance then later.

[Gustav Froberg, analyst]

Last one is on FabNext actually. Have you already managed to qualify a few customers that will be able to take wafers from January? Or are you still in the qualification process with the view of shipping them after you qualified your first customers.

[Michael Heckmeier, executive]

No change there. We expect first wafers coming out very soon. And then eventually, this will go to customers as planned early next year. So there's no change in the qualification time line. But as of today, of course, we did not qualify customers yet. That would be too ambitious.

[Operator]

The next question comes from the line of Martin Jungfleisch with BNP Paribas Exane.

[Martin Jungfleisch, analyst]

I have 2, please. The first one is on the Q4 margin outlook. When you take the midpoint of the implied Q4 outlook, we get to slightly higher sales quarter-on-quarter, but a lower EBITDA margin quarter-on-quarter. Just wanted to understand the dynamics. Is that because of lower hedging gains you expect in Q4 that could weigh on margins? And then the second question is on costs for next year, how we should think about [indiscernible] FabNext. We know the fab, can of course, generate margins of 50% in the midterm, but how does the ramp towards the 50% progress during the ramp phase, would you expect the fab to generate below group margins in the early quarters, so [indiscernible] margin diverges.

[Claudia Schmitt, executive]

Martin, this is Claudia. I will take your questions regarding Q4 first. Yes, you're completely right. We generated a huge profit from FX in Q3 and we don't expect that to recur in Q4 in this range. And regarding cost FabNext next year, its very clear that FabNext will be a really high-margin fab midterm, and we have a growing impact on our group margin during the end phase. But given the high uncertainty, Michael just mentioned that the crystal ball has not cleared up yet.

We've decided not to make any separate stand-alone statements on profitability of FabNext in the next year. So we will do that in the context of the guidance, which we do for 2024 at some point in time, which will obviously very much depend on the market next year, of course.

[Operator]

Next question comes from the line of Florian Treisch with Kepler Cheuvreux.

[Florian Treisch, analyst]

Just 2 left. So you talk about a stable pricing current environment probably also Q4, at the same time you're highlighting that LTAs are not really up for renegotiation going into '24. So would you extend your statement that you expect stable pricing also to stay looking to 2024? And the second is around the tax rate. So I got the point around the mix of shift because probably something is simply suffering these days or not producing as much as I should assuming a recovery memory, assuming FabNext ramp-up and kind of Samsung share increasing again, is it fair to assume that the tax rate will come down again, let's say, towards the 10% targeted so far? .

[Michael Heckmeier, executive]

So with regards to the pricing, based on the effects you just mentioned, and based, let's say, on the market environment that matured to our customers, recognizing wafer suppliers more as strategic. And again, let me emphasize this famous sentence, the most important waiver is the one I don't get when I need it. We, today, don't see any indication that the pricing environment will change and we don't see that happening in '24. But the crystal ball will tell, especially when we are close to '24. With regards to your other question, maybe I hand over to Claudia.

[Claudia Schmitt, executive]

Hi Florian, this is Claudia again. Yes, you're right. The tax rate is up this year. We've seen that our fab in Singapore, which is currently benefiting from a tax holiday was hit by the reduced volume this year. So the tax rate this year will go up. For next year, we do not do a guidance, but we can confirm that our allocation is done centrally based on several parameters, and we will see how they meet the set mix or the site mix will be in the future. We will give some light during our Capital Markets Day, perhaps you can join us in London and you will see how we'll go on there.

[Operator]

The next question comes from the line of Jürgen Wagner with Stifel.

[Jürgen Wagner, analyst]

I have a follow-up on LTAs. I mean you said prices are firm. Was there any change in the duration of LTAs? Or are volumes generally lower in new contracts? And then a follow-up on pricing. I think also in 2019, when you had a downturn, then your customers regarded wafers as strategic. So something must have changed since the last downturn maybe you can add a bit more, especially now with the yen weakening. So is it a Japanese that behave differently? .

[Michael Heckmeier, executive]

Thank you, Jürgen. In the overall LTA framework, we do not realize a change. I think it's related a bit to the question. Earlier as well, [indiscernible] in volume patterns. I think it's a portfolio of agreements. We're managing pretty on a stable basis. 2019 downturn prices, I wasn't there, but maybe some effect is also the further consolidation in the industry. So we have less players, which increase -- decrease the likelihood that somebody is leaving the track. We don't see it right now, and we don't have any indication that this is happening.

[Jürgen Wagner, analyst]

And last one on is industry, [indiscernible] in Germany, the subsidy. Do you think what would be your guess that you expect that to come? And if it comes, how significant would be your benefit? .

[Claudia Schmitt, executive]

Jürgen, this is Claudia again. Yes, regarding the industrial electricity price, it's not clear at all if it will ever be agreed on and implemented. So we do observe this very closely, but obviously, we do not have any influence on that. It's not clear at all if we will benefit if, for example, the EG regulation applies we are not energy intense enough to benefit from this industrial electricity price. So as mentioned, we are following the developments very closely. But at the moment, we cannot make a judgment on how we will be benefiting from it, if at all.

[Operator]

We have a question from the line of Daniel Schafei with Citigroup.

[Daniel Schafei, analyst]

Just on the inflation headwind. So you've been talking about this EUR 40 million headwind and improvement going forward. Can we expect that this improvement will still be a headwind in 2024? Or will it be already a tailwind.

[Claudia Schmitt, executive]

Yes. As mentioned before, we would give you some more insight on that during our guidance for next year, not at that point in time because it's not very clear. We see energy prices coming down a bit. But the other, especially materials, we are not clear by now. Of course, you can expect labor costs to go up due to tariff agreements. But other than that, we cannot comment on that for next year at that point in time.

[Daniel Schafei, analyst]

And just maybe on financing. Also, so you have amassed quite some debt in the last quarters and given that you still have some CapEx in 2024 plan. Would there be a need to take up more debt even besides the syndicated loan that you have not drawn yet? Or would that be sufficient?

[Claudia Schmitt, executive]

Yes. We feel very comfortable with our financing structure, which consists of not only that but existing cash and prepayments and our own future cash flows, they are very solid base. We have a conservative financing approach in place, which says that we have always an adequate liquidity reserve. So potential follow-up financing is always on our watch list, but of course, it's very much depending on market development. At the moment, we do not plan so. But as I said, we have it on our watches, of course, in order to react if necessary.

[Operator]

There are no further questions at this time. I hand back to Verena Stutze for closing comments.

[Verena Stutze, executive]

Thank you. This concludes our Q&A session. Thank you for joining us today. We hope you will join us for our Capital Markets Day on November 13 in London. Goodbye and stay safe.