WashTec AG

XETRA:WSU

Earnings Call Transcript 2024-Q3

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the Q3 2024 earnings call of WashTec. [Operator Instructions]

So let me now turn the floor over to your host, Michael Drolshagen, CEO.

[Michael Drolshagen, executive]

Thank you very much. Ladies and gentlemen, on behalf of the WashTec Board, I would like to welcome you to the quarter 3 presentation 2024. Attending the call with me is my colleague, Andreas Pabst, our CFO of WashTec. In the first section, I will give you some spotlights and news on WashTec. In the second section, Andreas Pabst will present WashTec's quarter 3 results and figures.

Let's start with the spotlights and news. The newly formed team is focusing on WashTec's strategy to become an ecosystem provider, focusing on total customer care, on which we will have more news to report later. I would like to take this opportunity to inform you that we are currently working on our revising our comprehensive strategy for WashTec. This involves our mission, guiding principles, our culture, but also, for example, our brand values and company and equity story. We will communicate this to you in the first half of 2025.

Our machinery is our enabler. With our new SmartCare and SoftcareSE, we are perfectly positioned for our customers. We are setting new standards as an enabler on our way to becoming a full ecosystem provider, both in terms of wash speed and wash quality, but also in terms of digital connectivity. Our clear focus continues to be on the European and U.S. market.

In order to further implement and operationalize this strategy, we have worked on the organizational structure as well as on processes and partnerships. One example of this is the organizational anchoring of the new operator services as part of our global sales team, which is responsible for optimizing and professionalizing customer processes and aims to optimize our customer journey. With our strategy, we want to create a feel-good factor for our customers with and after the vehicle wash and contribute to maintaining the value of their vehicles.

As announced at the last quarterly conference, we fully implemented the matrix organization on 1st of September 2024. The 3 business lines have been implemented, and in addition to the markets, are equipped with a complete profit and loss for the area of responsibility. The functions assume process and responsibility and ownership and are the company solution providers.

This means that an organization has been implemented that supports cross-functional communication across all departmental boundaries and is highly cost sensitive once it has settled. We are already seeing the first successes in optimizing the assembly of our Rollover systems. In Operators' services, we have continued to work on cooperation to optimize our customer journey, as we will see later.

Next slide, please. To professionalize our strategy, we presented key areas of action in 4 categories in our last quarter presentation. In today's presentation, I would like to deep dive in some of the highlights and present them to you, including our machines as enablers for our ecosystem, our sustainable consumables to optimize our wash quality and our customer experience.

Over the past few months, we have been focusing on finalizing the development of SmartCare as well as SoftcareSE, which is currently in the ramp-up phase and is already being delivered to selected customers. Sales for SmartCare will officially start at the beginning of next year and will complement our portfolio perfectly. We are also recording incoming orders for our SoftcareSE according to plan. We're also working on the details of standardizing and modularizing our machines to reduce complexity.

Next slide, please. Today, we would like to present 3 highlights in chemistry, 2 of which are for Europe. Firstly, we are working on our sustainability in all areas. We have, therefore, installed our first machine to fill approximately 25% of our capacity in CHEM-IN-A-BOX. We are delighted to see that our customers are jumping on this bandwagon and that demand from the market is increasing.

We are taking a huge step in the right direction with this, particularly in the handling, but also in disposal, and can double capacity in-house within a financial year if demand continues to increase. This is another important step in our ESG and sustainability strategy.

Next page, please. In addition to CHEM-IN-A-BOX, we are also working on our consumable products. In some stations, we are using our new products for testing purposes to obtain and respond to direct customer feedback. Since the feedback is really outstanding, we have decided to talk about it today, even though the market launch will take place in first quarter next year. We are talking about MagicCare as one of several new products.

MagicCare is a brand-new high-end polish with AMP technology, which means active modified polymer. Special ingredients actively form a 3D cross-linked layer with exceptional properties. Best-in-class protection for clear coat service against, for example, UV radiation, and MagicCare delivers also shine and color enhancement.

At the end, MagicCare stands for a WOW factor with repair and easy-to-clean effects. This is an important component in our strategy for our customers with regard to the feel-good factor and after the carwash and the value retention of the vehicles.

Next slide, please. In the area of Operators' services and for our customer journey, we are working on the cooperation with SuperOperator. We recently reached an important milestone in the cooperation here, in which we have created a basis for the future with the contracts to jointly operate our products for our customers. From license plate recognition with many possible business models behind, to the upfront end, we are taking a huge step in this direction and look forward to our cooperation and to make our customers happy.

Let us now turn to our North American market and how we have planned the next steps on the topic of consumables on the next page. As an example, out of Europe, WashTec Chemicals hold a market share of more than 20% in Germany. In the U.S., the total annual market value for carwash chemicals amounts to USD 1 billion. Larger players dominate half of this market share, while the remaining half is supplied by independent chemical manufacturers. Notably, MarkVII holds a market share of less than 1% currently, rendering it practically nonexistent in this landscape today, and we want to change that with our chemistry.

Next slide, please. We are deeply convinced that we can repeat the success of chemistry in Europe in the U.S. To this end, we are focusing on the launch of our new brand car washer lines in one U.S. state, California, Greater Bay Area and Southern California, and later on Texas and Colorado. Furthermore, we are pursuing this path with our well-known and established partner in order to keep the complexity of the market launch manageable. Based on our test groups and their feedback, our brand launch in the U.S. is currently taking place at the trade show SEMA, and we are looking forward to the feedback from our customers there.

With that, I would like to hand over to my colleague, Andreas Pabst, for the presentation of the quarter 3 results.

[Andreas Pabst, executive]

Thank you, Michael. Hello, everybody. A pleasure to have you on the call today. Thank you. Now let's talk about WashTec Q3 figures. On this slide, you see our main KPIs for the first 9 months. To summarize the first 9 months in a nutshell, revenues are behind previous year, but we see that our order intake is coming back. In terms of profitability, we are doing well. Progress can be seen in the increasing EBIT margin, which is now at 8.2% versus 7.5% last year.

Let us now look a little bit closer to the figures. WashTec generated of EUR 334 million in the first 3 quarters. This is EUR 23 million or 6.3% less than prior year. The main reason are lower equipment sales, down by 6.7% to EUR 281 million compared to prior year figure of EUR 302 million. We had weaker sales to key accounts in North America and a decrease in the direct sales business. Contrary, revenues with key accounts in Europe increased significantly year-on-year, but was not enough to offset the negative trend in North America.

Direct sales business in both regions was down on prior year, mainly due to the lower order backlog and the lower level of orders received in the first few months of this year. Chemicals revenue fell too, mainly due to a weather-related fall in carwash volumes primarily in the first quarter, which couldn't catch up. In addition, in the prior years, we saw an increased delivery to newly acquired major customers in connection with the initial stocking of their chemical inventories.

Despite the lower revenues, WashTec increased gross profit in the first 3 quarters to EUR 102 million from EUR 98 million last year. This means that gross profit margin increased to a quite good ratio of 30.4% compared to 27.4% we saw last year. Sure the material price reduction supported us, but the main driver for this positive development is that we did a lot of our homework. On the one hand side, our efficiency programs to further optimize our production cost helped us to stabilize or even lower our production cost despite lower number of build units. On the other side, also the price increases which we did in the past now kick fully in.

All this contributed to gross profit as well as to full EBIT. As a result, group's EBIT for the first 9 months rose by 2.6% to EUR 28 million and EBIT margin improved from 7.5% to 8.2%. And remember, in the first quarter, we reported about one-off items of around EUR 1 million. If you take this into consideration, the overall EBIT margin for the first 9 months would even be a little bit higher, around 8.6%. Following the increase of EBIT, we also can report that our net income is 3% higher than prior year.

Earnings per share are now at EUR 1.30 compared to EUR 1.26 last year. And also, our equity ratio stays at a good 26.7% like last year. Our free cash flow comes in with EUR 25 million and is somehow on prior year level of EUR 27 million. Nevertheless, compared with last year, we have different movements.

In detail, this year, we had higher cash outflows for net operating working capital, whereas, last year, we had higher cash outflows for acquiring our U.S. production facility. In terms of hiring, we are still very cautious and restrictive with expenditures. At the end of this reporting period, we have 1,745 employees, which is 22 below last year.

Now let's proceed with the figures for the third quarter. Also, the third quarter revenues are down compared to prior year. With EUR 140 million, we are 5.2% short. This is primarily due to the weak course of business and equipment sales, especially in North America, both in key accounts and direct sales business. After 2 declining quarters, we achieved in our Chemicals business revenues on a par with the prior year. And again, based on the aforementioned reasons, WashTec could increase gross profit margin from 28.7% to now 31.0% in third quarter, quite a good development. This, together with the ongoing cost sensitivity led to a stable EBIT margin of 9.6% despite lower revenues. With the result, we can be confident that we as a management see the clear task for further improvement.

Now let's put those figures in a more long-term context. The development of revenue and EBIT for the last 5 years on the first 3 quarters as well on the third quarter can be seen on this slide. Compared with 2020 would potentially be a little bit misleading as this is the COVID year, but nevertheless, an impressive development in terms of revenue and EBIT growth.

But also if we compare 2022 as a starting point, we see that our revenues are in 2024 on a similar level as of that time, but our EBIT margin compared to 2022 is much higher, 8.2% versus 6.7% for the first 9 months and 9.6% versus 8.2% in the third quarter. So you see profitability is what we are aiming for and steady we are climbing back to our double-digit EBIT margin.

Coming now from the long-term development to our revenue split by region. Next page, please. In the Europe and other region, revenue fell slightly by 2.6% in the first 9 months to EUR 280 million. But if we take into consideration that last year also the Chinese subsidiary, which we sold in December 2023, contributed EUR 5 million to the revenues, we are on par with prior year.

The weak first quarter in that region, which saw difficult market conditions particularly in direct sales business and weather-related fall in carwash volumes in the Chemical business, still left some marks. In addition, the prior year saw an increased delivery of newly acquired major customers in connection with the initial stocking of their chemical inventories.

While key account business grew significantly year-on-year, direct sales business was down on the prior year. Especially in the third quarter revenue was positively influenced by key account business. At EUR 95 million, revenue was adjusted for the revenue of the China subsidiary on last year's level. North America, revenue in the first 9 months fell significantly by 21.3% to EUR 57 million. At EUR 20 million, revenue in the third quarter was 15.5% down on the prior year, less decrease, but still decrease.

Both direct sales business and the key account business were down in the first 9 months, mainly due to the lower order backlog at the beginning of the year and the weak level of orders received from key accounts in the first few months. But -- and that's worth to mention, orders received increased in the third quarter compared to the prior year.

Here now, our regional EBIT development. EBIT in Europe rose to EUR 26 million in the first 9 months from EUR 25 million adjusted by the China sale, corresponding to an increase of 7.3%. Once again, this effect is mainly due to the efficiency programs to optimize production cost and to the prior year price increases. Third quarter EBIT at EUR 10 million was on prior year level. China had no effect on the third quarter compared to the prior year.

In North America, it is not surprising given the revenue decrease also EBIT is below last year. Luckily, we already implemented several measures last year and still continue this year to increase profitability on a lasting basis. And that led at least to a positive EBIT. For the first 9 months, we achieved EUR 1.2 million compared to EUR 3 million last year, and in the third quarter, EUR 1 million compared to EUR 1.6 million last year's Q3.

Moving on to the revenue performance by product on the next page. The revenue breakdown by product show what already has been mentioned. In Equipment and Services, revenues are lower compared to prior year due to weak order backlog at the beginning of the year and the lower intake in the first months. Altogether, Equipment and Service revenue came in with EUR 281 million.

Chemicals fell by EUR 3 million compared to last year's 9 months period. This is caused by the already mentioned weather-related shortfall in carwash volumes, especially in the first quarter. Furthermore, we had last year some tailwind from the initial stocking of a new major customer. Both effects are hard to catch up later in the year. But if we have a look at Q3 '24 Chemistry revenues, we are back on prior year level.

Our EBIT bridge shown on this slide here gives some more details to explain the EBIT development compared to prior year. The first red and the first green column show our development in gross profit. With lower overall sales, we managed to increase our gross profit from EUR 98 million to EUR 102 million. Respectively, our gross profit margin rose to 30.4% from 27.4% last year. This was due to the efficiency programs to optimize the production costs and partly to price increases implemented previous year.

On the other hand, we invested those savings partly in R&D. Research and development expenses were 10.5% or EUR 1 million higher than prior year. The increase mainly related to additional activities to speed up the exploitation of market potential in Europe and North America.

Administrative expenses amounted to EUR 16 million, which is EUR 2 million above prior year. This was mainly due to the one-off expenses in connection with the change of the CEO position and expenses for cost optimization of the new production generation, together around EUR 1 million. Furthermore, we had higher spend for external advisory in the field of IT and recruitment.

Next page, please. Coming now to some other important financial KPIs. Let's start with the net operating working capital, the sum of trade receivables, inventories, trade payables and prepayments on orders. Compared to the same period in time of last year, this figure is nearly unchanged with EUR 93 million. If you compare this number with the NOWC at the beginning of this year, we see an increase of around about 11%, mainly due to the orders-driven buildup of finished goods, the basis of our sales in Q4 this year.

Our free cash flow with EUR 25 million for the first 9 months is also quite stable compared to prior year's period, and we are somehow confident with that number, as already explained earlier. Same with our net financial debt, which is at EUR 55 million end of Q3 '24, only slightly above prior year. WashTec is very well funded and our liquidity cushion is in a good shape. And finally, the equity ratio, 26.7%, same ratio like last year, and we have the same level of confidence.

Let's now talk about our order intake and order backlog. As usual, we do not give any detailed numbers due to the competitive reasons, but we want to share about the current trend. Therefore, this slide might be useful. Like last quarter, we indexed our order backlog of 2020 with 100%. You can see compared to that point in time, our order backlog as of September 30, 2024, increased significantly to 181%. Taking our seasonality into consideration, it is important also to compare on a quarterly basis, meaning comparing Q3 '23 with Q3 '24, where the index increased from 168% to 181%. This positive trend is mainly due to orders received from key accounts.

Orders received in the direct sales business also improved, and through the end of September, we are on par with the prior year. As a result of this improvement in orders received, the overall order backlog at the end of September was above last year's level in Europe and in North America.

This positive general trend in orders received in recent months is not yet reflected in revenue. And it is worth mentioning that in some countries market conditions are still challenging and there is always the risk of revenue slipping from one quarter to the next. But overall, we are confident with the order backlog for the total group.

After those details on current order intake and order backlog, let's now come to our guidance. As explained, we are currently facing some pressure on top line, whereas EBIT develops quite well. Looking forward to Q4 '24, we expect good revenue streams and continuous good EBIT. Nevertheless, we are not immune to slippage of revenue from one quarter to the next. We need to work hard to turn existing order backlog into revenue in 2024. Therefore, as of today, we still believe we will achieve our guidance in all terms.

For revenue, we had a guidance of plus/minus 3% compared to prior year level, where we currently expect to be at the lower end of this range. EBIT guidance is in mid-single-digit percentage range and free cash flow should come in between EUR 30 million and EUR 40 million. This guidance is subject to uncertainties, of course.

My last words are related to our next event. We will be at the Eigenkapitalforum in Frankfurt from 25th to 27th of November. Currently, the company presentation is scheduled for Wednesday, 27th in the morning. Hope to see you there.

This was it from the finance side. Now we are happy to answer your questions you might have. And for that, I hand back to the operator.

[Operator]

[Operator Instructions] The first question comes from Stefan Augustin, Warburg Research.

[Stefan Augustin, analyst]

The first one is actually on the fourth quarter and the implied development. I see that you have an increased order backlog and you stated that this is true for Europe as well as for the U.S. And if I do some math on, let's say, basically looking at the lower end of your guidance expectation, this still means that we will be significantly or well up above last year's sales for Q4. And that looks good for the group.

And I know you don't give, let's say, separate guidance -- sales guidance for Europe and North America. But looking last year in North America, we had a stiff increase over the quarters before. And if I would, now, putting in an even stronger increase would be quite challenging. So can you give us a bit an indication, is this easily done by Europe alone? Or how strong does a North American pickup need to be in the fourth quarter?

[Andreas Pabst, executive]

Okay. So yes, it's correct. We are expecting a growth, good growth, good Q4 in terms of revenue. And if we look in our books and the details, we are really on a single unit level and we are chasing every single unit, that we can install this unit already this year. Because we also see there is a pressure to fulfill our guidance, and we believe we can do it.

So you especially asked for the U.S. Also in U.S., we are doing exactly the same. We have here some tunnels which we want to install already this year. There are the orders. The sites are ready. We are doing our utmost to do this. But you can imagine if a tunnel is not ready already in this year, but at the beginning of January, you do not have it already in your own hand. But nevertheless, as of today, we are feeling confident that we will do this in both North America as well as in Europe.

[Michael Drolshagen, executive]

And to ensure that, we have implemented a task force supervising all the planned tunnels and rollovers in both countries to manage this with our customers, providers, with -- the station is ready, the machine is ready, that we have the installation capacity. And with that in place, as Andreas mentioned, we are quite confident to fulfill our promisings we have given to the market last year for this fiscal year.

[Stefan Augustin, analyst]

And the next one would be on the explanations in the gross margin. Can you, let's say, differentiate a little bit if the higher effect is coming from the efficiency measures or actually coming from the price measures? And yes, that would be the first part of it.

[Andreas Pabst, executive]

I will take the question. I would say it's more or less equal. On the one hand side, we really managed to reduce or keep the production cost per unit at a very good level. That is one thing. And now if you compare this first 3 quarters with the one of last year and all the price increases which we did in the year 2022, 2023, they are now all in, and they were not in the period last year. So I would say it's -- both are really the reason for this better gross margin.

[Michael Drolshagen, executive]

In addition to that, we are working heavily on bottom line to be more independent on the top line. So we started a lot of cost efficiency programs, which are not -- we are not seeing already in the numbers, but we are quite confident that in the near future we can implement them step-by-step, and also then seeing that we are improving on bottom line.

[Stefan Augustin, analyst]

So it would be right to conclude if you increase significantly the sales level in Q4, we should actually expect a quite good drop-through as price and efficiency should be consistent and effective also on the higher sales in both regions?

[Andreas Pabst, executive]

Totally correct. Higher revenues help us at the end of the day always.

[Michael Drolshagen, executive]

Yes.

[Stefan Augustin, analyst]

Okay. The last one is, actually what makes you so confident that you can repeat the success of the EU chemicals in the U.S.?

[Andreas Pabst, executive]

We have seen an opportunity. We don't want to attack the big chemistry suppliers with around 50% of the market share. And we see that size is between 1 to 10 -- we see that customers with size 1 to 10 places that they -- we did a feedback survey, that they are not confident with what they got offered in the past. And this is what we want to attack.

And with our MarkVII brand name, WashTec brand name in Europe and our new Car Wash Alliance brand with our partner and in future also with our own chemistry -- so we start with existing chemistry, but in future also with our own chemistry -- we can repeat our European success because it's strongly recommended by our customers that they want to have another key player where they can count on and which is listening to customer need. That makes us confident. And we are not attacking the U.S. in total. So it's far too big. So we do it step by step, where we already have experience in the country together with our partners.

[Operator]

[Operator Instructions] The next question is from Alexander Galitsa, HAIB.

[Aliaksandr Halitsa, analyst]

Maybe the first one on order intake. You've seen an improvement in Q3 it seems like across both customer categories. Just wondering if you can judge from today's perspective and I guess observing the current ongoing dynamics whether this was sort of a temporary blip, if you will, or whether there is a more sustainable dynamic to it? That would be the first one.

[Andreas Pabst, executive]

Mr. Galitsa, you probably are right here. So if you look at our key account customers, they are our bigger tickets, they are coming in, in 1 month or the next month. So it's fluctuating a little bit. But if I look at the last month and the average, I see that there is increasing order intake. And that gives us a lot of confidence. It's not only one big ticket. It's a lot of key account customers who gave us some orders. Really happy on that. And we also see that on non-key account customer on direct sale that the order intake is increasing.

So for example, we really see good order intake in the SoftcareSE, so the new machine which we have on the lower end. We already explained, I guess, in the last quarter call. There are a lot of things which makes us confident that this is not a flash in the pan. It's turning now the market, yes.

[Aliaksandr Halitsa, analyst]

Okay. Understood. That's helpful. And then maybe on the Europe, I guess, we've seen pretty weak development overall in the direct sales. I think as of 9 months, you are saying that key accounts grew significantly, which was evidently fully or more than offset by the weakness in direct sales. Just wondering how should we be thinking going forward? Are we now down to a more or less sustainable level in terms of direct sales? Or do you expect this sort of to be an ongoing headwind into 2025?

[Michael Drolshagen, executive]

We don't want to count only on key accounts. That is our strategy that we also want to have more sales and direct sales. And to get this -- SoftcareSE is our product in the future, which we started to implement and where we are now going to unveil this more and more in the market. To do this, we have to align our sales KPIs, that we can -- triggering our salespeople with our data we have out of our machines, the age of the machine and so on. And that we are going proactively to our customers and to do the business.

And this we did not consequently in the past. And therefore, we see here a strong door we can go through in the future and can do with our new machine more business here in direct sales, which we want to have to be -- that we have a second opportunity where we can make business with and not only focus on key part, that we split risk in the market more than we did in the past.

[Aliaksandr Halitsa, analyst]

Understood. And then the very last one for me is around chemicals. I wonder if you can add any color around your go-to-market strategy in the U.S. You kind of already alluded that you don't want to attack the major suppliers, which accounts for 50% of the market, but rather the other half. Just also wondering how those customers are different, I guess. So who is supplied by the top suppliers? And what is the remaining market, I guess?

And also whether -- like what's the leverage for you? What makes you confident you can actually switch those customers who are already supplied by other players in the market? Do you go with the pricing? Or is your installed base helping you in any way? Just any color you can provide on the go-to-market strategy here would be helpful.

[Michael Drolshagen, executive]

Okay. First of all, we are focusing on the smaller customers because the big key accounts are spread all over the U.S., which means we have to support all over the U.S. We have to implement sales and service all over the U.S. And therefore, this is not our strategy first hand. So the step-by-step approach we have decided is to focus on California, on the smaller customers between 1 and 10 sizes, and do this by direct sales with a new sales team which are going to ramp up. And if we have success and we ramp up sales team again and again, so step-by-step we will increase numbers of sales people in the direct sales area.

And if you multiply 1 billion business opportunity in the U.S. market and multiply this with currently 0.7% -- this is what MarkVII currently has -- and we double this first step and then enlarge it to other countries. Again, we can double this, hopefully. Then we will see that there are a lot of opportunities. And the good thing is the EBIT margin, which is much higher in consumables and chemistry than it is in other areas, in our equipment, for example.

[Andreas Pabst, executive]

Maybe if we add here also, the strategy is that we really focus on the first step on regions like California, where there is a high density of carwash sites. So that means that our sales people do not have to travel by hours to come from one side to the next. Imagine how it is in Montana, for example. And that is the step-by-step approach we really want to take, which probably -- or which we really believe here that this will have a good payback and a short payback period.

[Michael Drolshagen, executive]

And the big customers have contracts, which gives us the chance to step in for the smaller ones, because in that contract, you have to take specific volumes per year and so on. And that is how we want to negotiate and get into the business, with low risk at that end.

[Operator]

[Operator Instructions] Let's wait a couple more moments. There are at the moment no further questions in the queue. And there seem one follow-up by Alexander Galitsa, HAIB again.

[Aliaksandr Halitsa, analyst]

Just wonder if you can -- it's a question on the acquisition of the Polish distributor earlier this year. Just wonder how one should look at it, whether that was sort of a one-off transaction for you? Or can you imagine also further acquisitions down the road?

[Michael Drolshagen, executive]

We decided to go with the existing partner now with a new brand in the U.S. due to the fact that we wanted to reduce complexity in our business, or not to make new salespeople, a new operator and so on. And in the future, we think to do more acquisitions is a good way we should proceed to think about that.

[Aliaksandr Halitsa, analyst]

Sorry. I was referring to the acquisition of the European...

[Andreas Pabst, executive]

I guess Mr. Alexander asked about the acquisition of the Polish company.

[Michael Drolshagen, executive]

Sorry. Sorry. Okay. Sorry for that. We bought the company in Poland because this is a good chance to strengthen our services as well not only for Poland, as well as for the states around Poland, and to provide here in future also services which are cost competitive. We think also that this makes sense for other states. But we will decide this step-by-step. For example, we discuss a different setup in Italy, Spain and France, not with buying, but with -- on an organizational and process perspective how we organize the market.

[Andreas Pabst, executive]

Maybe let me add to this one. It's not the way that we are aggressively searching for M&A targets. The Polish distributor, we worked for many years together with him. He supported our key customers in Poland. And the person is now in the age of retirement and was simply a good chance for us to acquire the company with an excellent service team, installation team, which is very well organized within the Polish market.

So it was simply: it's a chance, take it. And I guess also in the future if there is a smart opportunity somewhere, we will not say no to it. But it's not that we are traveling around the world and searching for M&A targets, I would say.

[Michael Drolshagen, executive]

But in addition to -- to link this to our strategy, one of our biggest advantages is our service. And therefore, if there is an opportunity to strengthen our service, we will take it. There's a big market barrier for all the suppliers for washing systems outside Europe. And therefore, to have a good service in place, it's the best way to be protected.

[Operator]

With that, I am closing the Q&A session now since there are no more questions in the queue, and I'm handing the floor back over to the host.

[Michael Drolshagen, executive]

Thank you very much.

[Andreas Pabst, executive]

Thank you for attending our call. Hope to see you in Frankfurt. Bye.

[Michael Drolshagen, executive]

Bye-bye. Thank you.