WashTec AG
XETRA:WSU
US |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
|
US |
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
|
US |
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
|
US |
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
|
US |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
|
US |
American Express Co
NYSE:AXP
|
Financial Services
|
|
US |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
|
US |
Visa Inc
NYSE:V
|
Technology
|
|
CN |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
|
US |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
|
US |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
|
US |
Coca-Cola Co
NYSE:KO
|
Beverages
|
|
US |
Target Corp
NYSE:TGT
|
Retail
|
|
US |
Walt Disney Co
NYSE:DIS
|
Media
|
|
US |
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
|
US |
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
31.7
42.8
|
Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
Johnson & Johnson
NYSE:JNJ
|
US | |
Estee Lauder Companies Inc
NYSE:EL
|
US | |
Exxon Mobil Corp
NYSE:XOM
|
US | |
Church & Dwight Co Inc
NYSE:CHD
|
US | |
Pfizer Inc
NYSE:PFE
|
US | |
American Express Co
NYSE:AXP
|
US | |
Nike Inc
NYSE:NKE
|
US | |
Visa Inc
NYSE:V
|
US | |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN | |
3M Co
NYSE:MMM
|
US | |
JPMorgan Chase & Co
NYSE:JPM
|
US | |
Coca-Cola Co
NYSE:KO
|
US | |
Target Corp
NYSE:TGT
|
US | |
Walt Disney Co
NYSE:DIS
|
US | |
Mueller Industries Inc
NYSE:MLI
|
US | |
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Ladies and gentlemen, welcome to the conference call of WashTec AG. At our customers' request, this conference will be recorded. [Operator Instructions] May I now hand you over to Dr. Ralf Koeppe who will lead you to this conference. Please go ahead.
Thank you very much. Ladies and gentlemen, I would like to welcome you to the presentation of the WashTec Group's third quarter results of the fiscal year -- financial year 2021. With me here in the room is my colleague, CSO, Stephan Weber. As our CFO, Kerstin Reden, cannot participate in the call today. Our Head of Finance and Controlling, Sergej Wolodin, is joining us. To begin on Slide 2, I would like to give you a brief overview of the topics we will cover in this call. I will start with some updates on our digital platform and on how we deal with the omnipresent supply chain hiccups. Subsequently, I will present the figures of the business of the third quarter. Finally, we will have the Q&A session. Let me summarize our business model to take everybody on board. WashTec is the world's leading provider of innovative vehicle washing solutions. Our product range includes capital goods such as all type of car washing systems with the associated peripherals and water treatment systems. In addition, we offer our customers the services and chemicals, consumables required to operate the system. We operate a digital platform providing smart services to the customer. We arrange financing and offer the management of operations if desired. Slide 3. We have already presented my WashTec SB platform and access point to WashTec's digital offers. On this slide, you can now see the full picture of what is now available to our customers. Our customers can manage and optimize the operations of their assets. These offers comprise MyCarWash, providing data-driven reports about the machines, MyEasyCarWash connecting the end user to our customers, myShop enabling convenient direct access to spare parts and chemical orders, MySmartSite, providing controls to manage your wash park similar to our home automation solutions we all use. Remote service, driving equipment uptime of our customers. MyWashTec is setting a new standard in the carwash industry, our digital team continuously adds capabilities to the platform that extends WashTec's database offerings and smart services. Now some update on our SmartCare for the U.S. market without a slide. The U.S. version of SmartCare is installed as planned in the showroom of our West operation in Denver for customer presentations, including a second machine for customer evaluation. Slide #4. Some words on the supply situation. The supply situation with regards to the availability of raw materials and components has been tight and stills is. As you know, supply shortages in the aftermath of a declining market situation are not a new phenomenon, aren't they. But the extent of impact to the industry in general is probably new. At WashTec, we have taken a rigorous proactive approach in securing our supply chain. It is important to stop this action before problem arises. WashTec successfully coped with the situation with the result that there has been no significant interruption in deliveries to customers. Safeguarding delivery capability and adopting procurement actions to the changing conditions has been a top priority for our group. To make this happen, we invested twice as much in product maintenance and adoption compared to a normal business year and tightly aligned R&D production and procurement. We see the supply shortage continue into 2022, therefore, we will keep up our efforts working day by day in securing the supply to serve our customers. Next slide. Let me now present the detailed Q3 figures. We were very encouraged by the third quarter results. In the second quarter, we already saw a strong recovery, especially in Europe. The third quarter continued this development, as you can see at Slide 6. The third quarter revenue was up by 18.5% to EUR 111.3 million, prior year was EUR 93.9 million. As a result of the strong revenue performance, Q3 EBIT increased to EUR 15 million and was significantly higher than the prior year, EUR 7.3 million. This result includes EUR 2.7 million positive nonrecurring item resulting from the recognition in profit or loss for prior year loan under the U.S. government support program. Adjusted for the nonrecurring item, third quarter EBIT was EUR 12.3 million, which is likewise significantly higher than the EUR 7.3 million seen in the third quarter of the prior year. EBIT margin was 13.5%, 11.1% adjusted for the nonrecurring item, driven by the strong revenues, structural adjustments and efficiency improvements made last year and the resulting cost reductions. Free cash flow after lease expense was positive at EUR 5.2 million. The graphic on Slide 7 shows revenue of EUR 11.3 million was generated in the third quarter, and as already mentioned, was 18.5% up compared to prior year and on the level of precrisis years 2018 and 2019. Compared to the prior year, revenue growth in the third quarter was primarily related to increase in the key accounts. Key account revenue went up by more than 50%. Despite this, it was still below precrisis levels in the third quarter. Revenue in the direct sales business was also, once again, higher than in the prior year as in the second quarter, direct sales revenue was higher than in the precrisis years. Free cash flow was below prior year, but in line with our expectations. Last year, cash flow was positively impacted by a reduction of working capital due to the low level of activities due to the COVID-19 circumstances. Third quarter revenue growth in equipment and service was driven by both key account and direct sales, as you can see on Slide 8. Particularly worthy of note is the positive performance in the Chemicals segment, with double-digit growth both year-on-year and compared with 2018 and 2019. The upward trend in orders received continued in the third quarter. The order backlog at the end of September was significantly above the prior year. On Slide 9, I want to show you the Q3 development by region. The large midyear order backlog led in North America to an expected positive revenue trend in the third quarter. Third quarter revenue was up by 50.17% to EUR 22.3 million compared to prior year at EUR 14.7 million. This increase was mainly due to a significant improvement in key account business compared to the first half of the year. Third quarter EBIT amounted to EUR 3.3 million. Adjusted for nonrecurring items, third quarter EBIT came to EUR 0.6 million, prior year was EUR 0.9 million. When comparing with the prior year, it should be noted that the quarterly EBIT includes higher material costs of approximately EUR 0.5 million in connection with significantly higher key account revenue and the normalization of cost levels. The positive revenue trend in Europe in the first half of the year continued to the third quarter with growth of 15.3% to EUR 88.2 million. Third quarter EBIT was EUR 11.5 million. That means a plus of [ 91.7% ] compared to prior year with EUR 6 million. In Asia Pacific, we see in addition to the difficult revenue trend in China business in Australia, in particularly, was hit by renewed lockdowns there during the third quarter, therefore, revenue was shown down 21.7% at EUR 4.7 million compared to prior year at EUR 6 million. Slide #10. Revenue in 9 months to September was EUR 306.3 million, prior year EUR 269.3 million and so slightly down compared with 2018 and 2019. This exclusively relates to key accounts revenue, which is still below pre-crisis levels despite a significant recovery in the third quarter, as already mentioned. EBIT in 9 months to September improved to EUR 33 million, prior year EUR 12.5 million, which means that group EBIT was more than double relative to the prior year. The EBIT margin was 10.8%. This includes a EUR 2.7 million positive nonrecurring items resulting from the recognition in profit or loss of a loan under the U.S. Government support program granted in the prior year. Free cash flow, including repayment of lease liabilities of EUR 19.4 million in 9 months to September is slightly above prior year, EUR 19 million, but significantly increased compared to the years 2018 and 2019. On Slide 11, you see the year-to-date results by segment. Particularly worthy of note is the positive performance in the Chemicals segment with double-digit growth both year-on-year and compared with 2018 and 2019. The upward trend in orders received continued in the third quarter, and the order backlog at the end of September was significantly above the prior year. Let me show you the year-to-year date results now by region, Slide #12. In Europe, revenue of the first 9 months of the year rose by 50.9% to EUR 251.3 million. The year-on-year revenue growth cut across all product and customer groups as in the group as a whole, the revenue growth relative to precrisis years in Europe was mainly achieved in the direct sales business, while key account revenue is still significantly down. EBIT in the Europe region amounted to EUR 28.6 million in the 9 months to September and more than doubled compared to the prior year, EUR 40 million. Slide 13. Revenue in North America in the 9 months to September was up to [ 70% ] year-on-year to EUR 51.6 million; prior year, EUR 48.1 million. In the North American region, EBIT for the first 9 months came to EUR 3.9 million. In prior year, we noted an EBIT loss of EUR 0.9 million. As already mentioned, EBIT in North America includes EUR 2.7 million positive nonrecurring item resulting from the recognition of profit or loss of a loan under the governmental support program granted in the prior year. Adjusted for this, EBIT in the region was EUR 1.2 million. Slide 14. In the Asia Pacific region, revenue of EUR 12.3 million was generated in the year-to-date. This represents a year-on-year decrease of 8.2%, prior year EUR 13.4 million. In addition to the difficult revenue trend in China, business in Australia, in particular, was hit by the renewed lockdowns were during the third quarter. In the Asia Pacific region, EBIT was in positive figures at EUR 0.9 million after breakeven results in the first 9 months of the prior year end. On Slide 15, net operating working capital at EUR 88 million is slightly above September of the prior year, EUR 86.4 million, despite significantly higher business volume. Equity ratio above 30% and net debt at EUR 10.7 million shows the solid balance sheet structure of WashTec. Next slide. Finally, some comments on information on our guidance on 2021 and financial calendar. Let me say a few words about our guidance. You find it on Slide 17. We consider the third quarter performance as confirmation of our revised guidance of July 13, 2021. We still expect over 9% revenue growth and an EBIT margin in the region of 10%. As you know, I must point out that this guidance is subjected to operational uncertainties, but it's 2 months to go and this year's excellent performance of the WashTec team, I have a robust view on this matter. On Slide 18 you can see our financial calendar. In November, we will be attending the equity forum. We are also planning an Investor's Day on April 7 next year. The exact details will be communicated accordingly. On May 16, 2022, we will have our general meeting. Also, here, details will follow beginning next year. Thank you for your attention. I now hand over back to our host for the Q&A session.
[Operator Instructions] And the first question is from Aliaksandr Halitsa from H&A.
Probably to start off is the U.S. market. I mean, historically, WashTec has struggle to sustainably develop this market. And as we are seeing some progress here, can you maybe share your views as to why this time should be different? And yes, what should be the key growth areas maybe in terms of customers and products, if you share some thoughts would be helpful.
SP03 When it comes to customers and products, I will hand over to Stephan Weber. And on the cost side, I can give you later on some comment on this side.
I mean, why do we believe that this is sustainable at this point in time. We are foremost of all our restructuring exercise last year has helped us to put a foundation, which now proves to be profitable even in the first half of the year where revenue was clearly below last year's revenue. And still, we were maintaining a profitable result. Secondly, we have currently the highest order backlog ever in history. Thirdly, I would say, from a customer point of view, now key accounts came back, whereas we have been surviving throughout the corona crisis mainly on direct business and very little key account business. And thirdly, I think on the product range, I would say that we have, in addition to our normal rollover business called [indiscernible] in the U.S., we have currently also -- we are currently developing a sustainable and also, let's say, substantial panel business, which we introduced like 3 years ago. But in the meantime, we are also breaking a good order intake, which will constantly lead also to higher revenues on that part. So we have product issues. We have customer issues. And I think the cost structure that we have implemented that gives us confidence, including the order backlog that we are having that this can be contained.
Yes. In addition -- material costs in the U.S. is -- can be seen in the third quarter. In Europe, the effect will come in the fourth quarter, just to give you this information ahead. But of course, there are reactions in cost reduction in material, working on the equipment and, on the other hand, price adoptions, which, of course, we do not like to talk about too much, but those adoptions have been made already before. And of course, we will see what the future will bring on this side.
Maybe just a follow-up on that. Where would you say you see more of a catch-up potential in the U.S. market? Is it addressing key accounts or direct sales? Or is it equal?
On direct sales, we have shown now 5 years, I would say, easy in row constant growth level also in the 2 digits, whereas in the key account business, we have seen dip last year, let's say, certain reluctance to invest not only in the U.S., also on group level. I think that was the biggest impact on last year's result was the, let's say, small amount of key account orders. And in the meantime, the key accounts in the U.S. have gained confidence. Plus, we are, of course, always hunting also for more key accounts, let's say, local key accounts, not maybe global recons, But as we all know, that there is some substantial local players that we can also serve and we have been able to also onboard one or the other on that level. And this, together, I think the direct sales performance will continue to grow as has been in the last couple of years. And on key accounts, we'll also be going again, let's say, sustainable.
[indiscernible] information for that just because some of you might remember, key account volume in the U.S. is above 50%, whereas, in general, it's below 50%, just to give you that information.
Yes. That's helpful. And then lastly here, I apologize if you have mentioned already, and I missed that. But just to clarify, when one thinks about the EBIT margin for the U.S., as you come in from the breakeven territory, are you content with the current setup in terms of cost structures, et cetera, so that you can relatively quickly ramp up margins as sales grow? Or do you think you will need to build up more costs to support the anticipated growth?
I mean, I would say on the variable side, we have no other choice to also add resources. We have to produce, let's say, 30%, 40% more machines. We have to add resources. There is no point, but we have no intention to grow on the fixed cost side in there. So in that sense, we are, of course, looking forward to better EBIT margins. But as I've Ralf said, subject a little bit that we are hanging through a little bit in Q3 now because the impact of the material cost increases, which we have taken action in terms of price increases already, but that will take a little bit of a delay until they are -- currently, we are in Q3 serving orders that have been booked in before the material is increase. Yet, we are still profitable in that quarter. So all in all, we are still confident that we can grow also the EBIT margin here constantly.
And in terms of COGS ratio in the U.S., would you say it's close to the group average? Or is it significantly different?
It's different. The cost of goods sold is slightly higher in the overall. [indiscernible]
The next question is from Eggert Kuls Research.
Hello, can you hear me?
Yes, loud and clear.
Okay. Very good. So 3 months ago, you expected supply chain issues and higher raw material prices to burden margin by 1 percentage point. Whether I have a closer look to -- the current report, my feeling is that the wording has become at least a little bit more cautious. So my question is from a current point of view, do you expect to see a larger burden than the 1%, maybe 2%? Or what is your current view on that?
I mean, from our point of view, the way we look at it, I mean, like we say in the EBIT ratio that we sort of outlined here, we still believe that we can do above 10% for the year despite the material cost increases that we have seen already in the U.S. to a larger extent this quarter, and we will see next quarter and the current quarter of Q4 in Europe. But still, we believe that we can deliver about 2-digit EBIT ratio. Would that answer your question?
Yes.
We are robust on the revenue side, and we have some impact on the EBIT side, but the guidance is, we think, robust, and therefore, we put that this way. But in the, let's say, supply chain side, it's kind of a nightmare. We are working quite successfully. I'm very proud of the team, but it's a lot of effort we were taking there to be able to deliver. And you know our competition is not publicly transparent in the sense. So they are a family company, family-owned companies, and I cannot make guesses. But if you can deliver in such -- under such a situation at the end of the day, you gain market share. That's for me, for sure, and the lessons learned from my former job assignments, and that's why we have kept from the beginning, let's say, priority on this. But it's -- let's say, when you talk with a supplier, they tell you everything is okay. And 1 week later, they come up with maybe some problems you have then to jump in and resolve in a very quick manner.
Yes. Okay. Understood. Of course, also for us, it would not to make externally projections with all the supply chain issues. But principally, I think when it comes to your order backlog, and assuming you would not have supply chain -- further supply chain issues or delivery interruptions, then I think the basis for a good quarter is where at least for our top line? My question is with regard to the margin, the 10% margin. Is that including or excluding the one-off?
We'll see about 10% at the 1 or [indiscernible]. That is good enough for you.
Yes. So I can imagine 3 months ago, you were already aware of this EUR 2.7 million to come in the second half of the year. So maybe you have already included that at that time in your guidance. I don't know.
Yes.
Okay. And then in your report, you spoke about, yes, I would say, temporarily higher inventories necessarily by the end of the year in order to ensure that you can deliver on time. So of course, this will impact the free cash flow and your guidance, you have a significantly lower free cash flow for the full year. So I can imagine that the free cash flow in the fourth quarter will be negative. Is that a fair assumption?
Your assumptions is logical, but there is 1 information, which is missing. We have quite a few orders where revenue recognition is later, but we have prepayments.
Down payments.
Down payments. We have down payments for that. the effect will be masked somehow. And to the effect of inventories Usually, we are ramping down at the end of the year, also our, let's say, presumptions.
I know. Usually, it's far lower after Q4 that after Q3. So...?
We will not do this this year. But the second piece of information is that we have down payments in quite a high volume, and therefore, net working capital will not show this figure completely.
Okay. Okay. That's good to hear. But overall, I think it's only a temporary effect as long as the supply chain issues will continue?
Yes.
Or is that -- or will there be rethinking about inventories because of this experience?
No, no, not generally. I think the supply chain issues will take into 2020. But at the end of 2021, I think we should be to a normal situation. And the thing is, if you work in a partnership with your supply partners, to ask for this adoption at the end of the year is not the best thing to do. Frankly speaking. We choose that to do this. And also with the order backlog we have in Q1, we have to get out of the starting block, let's say, quite early in January. And this, together, makes the schedule of such a situation. And we put that into the report because we don't want to give you a surprise at the end of Q4.
Okay. Okay. Very good. You told us that, with regard to your price increases, you don't want to talk too much about that. I can understand that, but maybe you can tell us when you will feel the first impact from the price adoption? Is that Q1 2020 or...?
Yes.
Yes.
The next question is from Richard Schramm HSBC.
First, just a quick clarification. I'm not sure if I understood it correctly, but your EBIT guidance includes this special effect -- or EBIT margin guidance includes this special effect that we have seen in Q3. Have I understood this correctly?
Yes.
Okay. And then also clarification -- I mean you talked a lot about your successful management of the supply chain, which gives to me the impression that a lot of risk is signaled here to the outside, but at the end of the day, things are not as dramatic as they were expected. And you also say that currently, you have no direct impact on the production, which might suggest that there are possible indirect effects to give a hint on what do you mean by that?
But the indirect effect is that, usually, you have a certain budget for product maintenance. And the number of projects for product maintenance is just doubled this year because we do the adoption to the products. You have a higher volume on this. But the way why I pointed that out in the Q3 presentation here is because many analysts were, let's say, doubting whether we can be the only ones in the one's sense being not affected. And I wanted to give you some insight why we are not affected. And this is, of course, there's a stringent process behind it at WashTec. But on the other hand, we also have been not lucky, but we have been really quickly in reacting and this is really a great, let's say, turnout and results for the team.
Okay. And would you be prepared to give a number to these extra efforts you have made here to maintain our delivery?
Yes, just, let's say, EUR 1 million direct let's say, a budget of increase in maintenance of EUR 1 million. [indiscernible].
And the affect from higher material prices, would you quantify this to some extent or...?
As we already mentioned in Q2 call, what we expect is around about 1 percentage of EBIT.
1% of EBIT.
About EUR 3 million or so for the year?
In the fourth quarter, yes.
And you see that in the fourth quarter. I'm just a little bit -- I have the figures by the product and not by the EBIT. So Sergej Wolodin was mentioning 1%, so EUR 3 million in Q4. And those surprises if you remember that sentiment 3 months.
And then 1 question concerning the development in Asia. So the negative development in Q3 was particular to Australia. That's correct. And China was positive but could not offset this right, because in the chart it was the other way around. So [indiscernible].
But let me -- Stephan, ever will explain you the situation in China. But when you look at the news in Australia, Australia has closed down, has not focused on vaccination and tests. So they're really now having a huge impact in COVID infections. A little bit puzzled for us from the European side looking down there, but that is the effect, and we hope they're getting out there soon. So we are back to normal business. But on the China side, maybe Stephan -- We have discussed this and already presented the strategy what we are coping there and what we're doing there, but let's give an update on that, yes.
I mean we have 2 different scenarios. Like I've said, I mean, we are let's say, seeing a slower growth in Australia than we expected. However, in the favor of our order backlog. In other words, due to the fact that even tower sites were closed for 2 to 3 months, just about a week ago, they were reopened again in Maven and in Sydney. That had, of course, an impact on our business. However, the Australian business has been turned around 2 years ago through the course of last year basically. And we are on a very positive trend, and that's also shown in the positive results. China, we have also, like we already reported, restructured. So we are running on a much leaner ship there. Currently, we have our task to solve and on a good way to find partners to serve the larger mineral oil companies that are aiming for paper wash contract, which we cannot serve with our current structure or we are not intending to sell it or kind of structure. We have made good progress there. So overall, I would say Australia is now back on track with a very good order backlog and will turn in a very good year this year despite all the lockdowns. And China, like I said, on a good upward trend again after some difficult times in the first 2 quarters.
So this suggests that Q4 should be your certain catching up of this negative effect in Q3?
The revenue is expected if we can install, and that is -- the key question is if car washes are down, you're able to install. If we cannot install, we cannot also raise invoices. So that is the major impact on the Australian market. As we are talking right now, we can install. In other words, if this doesn't turn back on us, we will see a strong Q4 for sure in revenue in Australia and the related EBIT, and China on an average curve. So Q4 overall should show a positive trend in Asia Pacific.
[Operator Instructions] And we do have a follow-up question from Aliaksandr Halitsa, H&A.
Yes. Could you maybe share with us maybe more details if you can on how much are sales with key accounts below the pre-COVID level? And how much the there sales are above the pre-COVID level?
Maybe I'd like to answer in a more general way, let's put it this way because that would also in line is absolutely in line with what we reported. I mean we had a dip of about EUR 50 million or just about EUR 50 million last year versus 2019. And that almost all came out of key accounts. So in other words, once we are back to that level, which we are not yet, we shall be also seeing the performance of 2018, plus a continuous growth in direct sales. So there is some upside of -- to reach above crisis levels. Would that answer your question to -- fairly enough?
That's helpful. And in terms of direct sales, you've mentioned that they've been growing for some years now, some relativity to the pre-COVID levels, how far have they grown?
I mean, like I said, in the U.S., it's a 2-digit growth and, in overall, I would say, also, it's a very solid 2-digit growth from last year, about 20%.
And we have another question from Eggert Kuls, Warburg Research.
Yes. Got it again. A question regarding the EBIT margin in Q3. When I adjusted EUR 2.7 million, I come to a quarterly EBIT of EUR 12.3 million or 11.1% margin on EUR 111 million sales roundabout. In Q2, you had EUR 110 million sales and margin of 13.1%, so 2 percentage points higher. And you told us that in Q3, you had more or less only limited headwind from raw material prices. So what is the reason for the big difference in the margin between Q2 and Q3?
First of all, in Q3, we have a massive in the U.S., but you can also see by the single result of North America. Despite a far higher top line, we have not really improved our EBIT, which we are now, let's say, hiring out by price increases. And secondly, that we had a significant high key account turnover in Q3 versus Q2, and that is always when we have key account turnover and margins are slightly inferior to direct business.
Okay. Okay.
And the cost structure is now also with traveling expenses and whatever else coming back to a more normal level, we have to say, I mean, until Q2, we have hardly been traveling. But in Q3, we are we want our salespeople and service staff, we have to travel again to regular -- at a regular level, I would say, precrisis level, and that also has an impact.
Yes, of course. So I only want to understand the figures. So when you're saying that you expect -- yes, headwind of 1 percentage point on the sales level, so EUR 4 million roundabout, and you have had EUR 2 million already in especially in the U.S., and you're expecting increasing headwind in Q4. So it seems that it will be more than EUR 2 million in the [fourth]indiscernible] quarter at least...
Yes. What we mentioned this EUR 4 million is more or less the amount we expect for the fourth quarter. We want to get that not pick up. But for the fourth quarter, we expect a high increase in this number.
Okay. Okay. But on the other hand, you should have a higher top line Q4. I think, at least when assuming you have no delivery interruptions, right?
Exactly.
Yes, exactly.
And we have currently no further questions. So I hand back to Dr. Keoppe for closing remarks.
Ladies and gentlemen, thank you for attending the third quarter call and a good discussion concerning outlook on fourth quarter. I hope you'll stay well. I'm looking forward to hear and to see you for the fourth quarter, let's say, year-end results of 2021. Thank you very much.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.