Esprinet S.p.A.

Good afternoon and welcome everyone to the Esperenet Q2 2022 results presentation. Before starting, I remind everyone that the webinar is mere recorded and after the call, the podcast will be posted on the Esperenet website in the investor section together with the presentation. All cameras and microphones are currently disabled. During the Q&A session, we will proceed to reactivate the microphone of those who, by raising hands and using the button, At the top, represented by the hand, will want to ask questions. Please note again that this presentation contains a forward-looking statement, so I would like to draw your attention to the regulation note on page two of the presentation, which provides all the details. I'm Giulia Perfetti, Investor Relations Manager of EspritNet, and with me is Alessandro Cattani, CEO of EspritNet. Now I pass the call to Alessandro to present and comment with you the Q3 2022 results. Alessandro, over to you.

Thanks, Giulia. Welcome, everybody. This is our first test with Teams presentation instead of a Chorus Call 1. So here we are with our Q3 2022 results, and I would jump in immediately to our slide number four with a summary of what happened in the first nine months in Q3 of our fiscal year. Well, we had very solid revenue growth during the third quarter, and this is supporting cautious optimism for year-end. We had the first part of the year with the minus two in Q1 and minus three in Q2, but in Q3, we had 7% growth, and it could have been even higher and we'll comment it a little bit later, if we had not had an anomalous concentration of sales in the last two days of the quarter. And because of the revenue recognition methodology, we had significantly more than an average revenue recognition. So quite a significant chunk of sales were pushed over to Q4. Italy during the first nine months of the year performed on minus 4% against the previous year. Spain and Portugal at 6% growth. EBITDA stood at 54.4 million euros, minus 6% compared to previous year. It's worth noting that The vast majority of this impact is linked to a specific Q2, not issue, but tougher comparison year on year, because last year we had in Q2 a very significant deal on our own brands, which were not replicated this year. And in terms of a bid adjusted as well as net income, these of course were translated down because of the lack of the initial gross profit of this deal. What is anyhow interesting is that the gross profit of the company grew to 522% against the 516% of the nine months of 2021. Even if we were missing this year, This is a particularly rich deal. And even if we have been suffering higher freight costs during the especially the second and third quarter, because of inflation. Return on capital employed at 11% is heavily impacted by the cash cycle, which has been at 21 days, eight days more than last year and four days more sequentially. As we mentioned in previous calls, we are through a spike in inventory, mostly of consumer-related screens, PCs and smartphones, especially PCs. We are slowly but constantly absorbing the success of inventory, but still this has been waiting on our return on capital employed. Generally speaking on the capital employed, And you can see it also in our net financial position, which has been negative for 3.82 against a negative of 200 million in September last year. If we dig into the five pillars, this is the second quarter where we report our business lines in our new definition. So I remember quickly screens, RPCs, and smartphones, devices, everything else that is not sitting into essentially a data center. Solutions is everything that is in a data center, plus the software, cybersecurity, cloud, and vertical solutions, for instance, barcode readers and printers. Services are internally provided services, and home brands are NILOX and Challenge. Well, we can see that revenues were flat overall, but with a very different dynamic in the first nine months of the year, minus 5% on screens, plus 6% on devices, solutions growing 14%, services 25%, and home brands affected by the lack of this special deal, 17%. Profitability was a bit adjusted, was down 2% on screens, with a bit of margin slightly growing to basis points. Devices have been performing spectacularly within our group, with a very strong growth in sales. EBITDA margin as well as in EBITDA in absolute terms. And then solutions that were down from a percentage standpoint, but up 5% in absolute terms. We had a drag on our performance in terms of EBITDA, mostly because of the own brands, seven plus million that we mentioned in the opening. and we add lower margins in the services, mostly due to a different mix. If we look at the quarter, we have then a bunch of comments in the following slide, and let me just go quickly through this. If we look at the own brands, during Q2, as we said, we had this big deal, which was not replicated this year. In Q3, the own brands were down in terms of EBITDA, and that was... Mostly driven by higher weight or lower margin product lines. So we have more margins on celli rather than NILOX. So more margin on smartphone lines, smartphone accessories rather than on PC accessories and mobility. But we also had the lower on average, lower gross profit margins. Here I remind everybody we buy from China in dollar and we ship from China. So we are the manufacturer here. And we were heavily impacted by inflation on freight from China as well as by an impoverable exchange rate dynamic. So here we had a certain pressure. We do expect some of this pressure to continue in the months coming forward, even if the volumes are performing relatively well. The screen pillars were down in terms of a bit adjusted, but entirely because of the volumes. In reality, the margins were better, and we were able to pass down all the inflation on PCs and smartphones, least prices. and even recover a good chunk of the additional freight costs charged by freight forwarders for shipping to customers. What is worth noting is that during the third quarter, consumer demand exceeded expectations by a big amount. We do expect that probably this was supported by aggressive investments in promotional activities by the major PC vendors that are trying to reduce inventory levels across the industry. And all these promotional activities are in a sense of setting the inflationary impacts on consumers. Solutions and services. as a whole grew to 587 against the 501 of 3 million in the first nine months. So a good increase and their total weight on sales grew to 18% against the 16% of the first nine months of 2021 in line with our strategy of growing our margin business lines. The solution business is still confirmed as the business line that makes the most of the adjusted absolute value. During the Q3, we had a sharp reduction in EBITDA margin on solutions. And that's been driven by a lower gross profit margin, which was driven by a mixed skew towards hardware. We have significantly higher margins on cloud cybersecurity and software against the traditional hardware products. especially service and storage. And we had during the quarter a lot of additional business, but with lower margins. We do believe that the situation should improve in Q4. There were some, let's say, one-off events during the quarter. All in all, as mentioned, the gross profit margin grew. from 5.16 to 5.22 in the first nine months of the year against previous year. Within this growth, you have to discount the basis points of additional growth of additional freight costs, transport costs. So all in all, I think we have been doing a very good, very good job in moving inflation downstream, as well as addressing the higher margin business areas. You can see it also from a customer point of view, the weight of IT resellers, which typically provide better profit grew and it's now 63 in the first nine months, 63% of total sales against 58% of 2021. the weight of EBITDA adjusted on revenues was down anyhow 169 compared to 180, mostly because of the operating costs that were up to 353 against the 336. And that was mostly linked to the investments that we're doing in people to progressively push volumes towards higher margin business lines. If you look at the volumes, the sales by geography, market was up 1% in Italy and we lost the share there, mostly because we walked away from the lower margin businesses in consumer. We grew share in Spain and we lost a little bit of share in Portugal, even though we grew pretty well. If you look at the main pillars screens, although we decreased our volumes by 5%, we decreased less than the market, which was down 7%. We outgrew the market in devices with a very good performance, 6% against 4% of the market. And we were in line with the market with solution and services. We don't yet have a market data, official market data available for the on-brands market. We're working with GFK. We're trying to see if we can replicate what we have on the other business lines with Context and GFK as well. By customer type, market on retailers was down 7%. We were down 10%. Again, losing share in the lowest margin businesses in line with our strategy and trying to retain the best deals possible uh whilst we outgrew the market on it resellers where we were up 11 against the nine percent of of the market so all in all execution of the strategy is in line with our expectations If we look at the quarter, the picture is a little bit different. Again, we lost the share in Italy, five against 11 in line in Spain, and we lost the share in Portugal. We are walking away from certain deals as well as not having the complete portfolio as we have in Italy and Spain. There were certain market areas which were growing significantly, and we were not there to profit from those areas. We lost a bit of shares in screens. We outgrew the market in devices once more, and we were in line with the market in solutions and services. And young brands kept growing again. Significant drop in retailers against the market and significant growth in resellers. So all in all, we are really moving the market, the mix in the way we think is an healthy growth trajectory. A couple of comments on the overall P&L. We already commented at length the gross profit performance on SG&A. They grew on sales to 17 basis points. Seven are linked to the running costs of new warehouses that we rented in 2021 for certain projects, especially in the devices business, where we are growing pretty fast and we do expect to grow further more in the future. And another 11 business points are linked to the increase in the ad count, which I mentioned before, which we are doing to follow the expansion of the higher margin business lines, device, solution, services, and on-brands. In the financial expenses, we still have most of the debt at the fixed interest rate, so no real... there, apart from a higher absorption of capital linked to the excessive inventory. But we had quite an impact on foreign exchange losses because of the US dollar exchange rate. We shield some of the risk, we edge some of it, but not all of it. And although those are small, overall small volumes for us, those in dollars, but still the impact in the exchange rate was so big that we had this impact. Given the recent dynamic, we do expect this theoretically to improve and possibly turnover as well. Tax rate is essentially unchanged. If we look at the balance sheet, it all boils down to the operating and networking capital. And you can see it in the inventory. It basically stopped growing. And we're seeing the first impacts of reduction in this very moment, eventually. um there's a bit more of trade receivables against last year linked partially to higher volumes and partially to the fact that we are walking away from retailers and retailers typically are eventually providing less trade receivables because we sell receivables to factoring But there's been a significant impact on trade payables because we quit the purchasing. We got longer payment terms. But now we are in the phase in which the new arrivals are drying out and we're selling the inventory, turning them into trade receivables. And then we will start again the virtuous cycle with the financing from vendors. It will probably take all of this quarter and perhaps a part of Q1, but the momentum is there. We have already basically fixed the situation with a couple of vendors. Some others have very aggressive plans that are executed week by week. So we are more positive than before. Luckily, the market is performing better than expected. So this should help in improving this spike. Of course, this is reflected on into our working capital metrics. We have this. This is the four quarter average, which is growing significantly at inventory as well as DPO level. And You see it even more dramatically in the Q3 only numbers, which have been really heavily impacted. It's the worst quarter ever since 2018 because of this huge impact on inventory. uh hopefully in the next and what we see in the next quarters the situation should improve significantly and go back to our expected targets that i as i remember everybody is to perform below 18 days moving average so previous slide we are above our targets in this moment and As long as this is a moving average, probably we will have one or two quarters at least where this will drag on our numbers. And of course, this was reflected in our return on capital employed evolution, which has been impacted by this worsening of our working capital. Now, heading into the M&A before moving to the outlook, we have both recently, last week, Bluedis, and this way we have strengthened our solution segment in Italy once more. Bluedis is a company... which has been established under the Italian law by the company Spin SRL, which in July this year received the branch of business in software solution distribution and communication cybersecurity and IT management. The business we acquired was roughly 13 million euros in revenues with an FT 2.2 million. right about the 17% bid margin. So a really rich business. Value of the acquisition 8.7 million, seven paying cash based on a provisional balance sheet. And we had zero, basically zero net financial position. So equity value and enterprise value were essentially the same. There's an appealing implicit multiple of about four times EBITDA. This is particularly interesting for us because we, not only is in line with our strategy, but we see a growing number of high value emerging vendors, especially in software and cloud, but in cybersecurity and sometimes in in hardware as well. We have an organization which is mostly focused on bigger vendors. So this will act as our incubator for these smaller emerging vendors. They have an historical capability of scouting emerging entities with small volumes but high margins. they were plagued by the fact that when these vendors, or if these vendors were getting bigger, they typically lost the distribution contract in favor of larger entities, sometimes entities such as Exprinet or V-Valley, our value distribution, our solution distribution arm. And with this acquisition, we will be able to retain these contracts in time, even if the vendor moves from a merging to an incumbent. It will be operated, therefore, as a separate legal entity within our group, specifically within Vivaldi, and it will be kept in Rome as a separate entity. Synergies here will lie mostly in the possibility of leveraging the capability of Esprunet or being the Esprunet group and more attractive entities vehicle for more emerging vendors, therefore enabling Bluedis to sign more contracts and therefore grow them even faster. Let's wrap up with the outlook for 2022. As we have been saying in these last presentations with this first deep down on the environment in which we are performing, supply chain issues are mostly solved. We are now even on an oversupply issue on consumer entry level products. Of course, we're still cautious because sometimes here and there, especially in China, there's these lockdowns that have a potential impact on niche specific portions in our business. But all in all, supply is no longer a problem. Inflation and exchange rate, although exchange rate is apparently stabilizing now and potentially turning over, they had a significant impact during the first nine months of the year, and I speak about exchange rate. As per inflation, mostly we measured it on the shipping costs. We do have certain impact on energy and renting, but so far the impact has been rather small and not really so material. And as you have seen in the numbers, we have been pretty good at moving inflation downstream so far. Big question mark for us as for everybody, what will happen with the wages if the situation will change in the future and we'll stand and see what happens. Consumer demand, this is the big surprise for us as well. It's really exceeding expectations. We had a good feeling when we were budgeting this year. We had a good feeling for business demand, and you can see it has been performing in line with our expectations, our budget, And even the worries that we had with the Italian government after the elections so far have not turned into reality. Private companies keep on investing. Government keeps on investing. There's a good revenue momentum in corporate demand. On consumer demand, we had a budget which was much more conservative for the second part of the year and a little bit more bullish in the first part of the year. We are sort of experiencing something upside down with lower than expected volumes, especially in the screens in the first half and better than expected volumes in the second half. I do remember that we have, and that's for the environment. I do remember that in October, our revenues grew 13% without counting the revenue recognition extra level of revenue recognition that we measured in september those are on top we always have revenue recognition we mentioned it because this year the impact was really material against what has been the what is the average value as you know revenue recognition is theoretically should be something quite neutral. You get volumes from the previous quarter, you move volumes to the following one. Historically, it's not so relevant, but we had an anomalous level of sales in the last two days of September. So we could have made a very, very good or much better Q3. We will have it in Q4. But without counting this extra level of revenue recognition, let's say management figures on revenues were up 13%. And in the solutions area, we were up 22%. So momentum really, really strong. And consumer demand is exceeding expectations, and this is helping us to drive an improvement in inventory levels in the fourth quarter. That's what we are seeing, what we are expecting. So we are... cautiously optimistic, because volumes are much better than what we would have expected. Yes, of course, there's growth in lower margin areas as well, but all in all, we should be due to make a very, very strong Q4. Advanced solution is growing. Total Volume on sales is up to 18% against 16% in the first nine months of the previous year. And we see us keeping our position in line with market growth and even slightly outgrowing the market in some areas. We are experiencing a very good momentum also in terms of negotiations with potential new vendors. And we do have a pretty strong pipeline of potential deals, M&A deals that we are starting in this moment in the advanced solution space as well. Well, I already spoke at length about the revenue recognition and renting. Renting is eventually accelerating. After three years, let's say two and a half tough quarters where we were building the the right kind of service. And we had around 1 million of revenues. We have witnessed in the last month's volumes that were almost three times the volumes achieved since the beginning of the year. So sequentially, we're really growing quickly. We plan to close 2022 with a value of around 4 million euros, which is less than what we initially expected. But there's a very strong acceleration. So we're happy about what we're seeing in this area. And so based on the results, guidance is essentially with all the caution and the correct understanding that we are serving a very challenging environment, but we feel that the profitability growth expectations for this year should be met. We have currently a target of around 93 million euros, so roughly 8% growth against the previous year, when, I remember, the group set the record net profitability of its history. So, of course, it all depends on volumes and gross profit margins. But given the very strong performance of October, what we're seeing in November, And a number of other signs. We think that we are bound to have a very, very, very strong Q4. Some numbers we have outlined, 15% total top line growth. We have a carryover above expectations from previous quarter, 22% growth in solutions. So all in all, a pretty good forecast. uh as always uh we are now in the it's no longer uh black friday is uh black friday month and and then there will be december last year december was particularly strong we need to see if the performance will be in line but all in all we we see opportunities of uh delivering a very, very solid 2022 as we forecasted at the beginning of the year. But frankly speaking, the expectations in terms of macro economy were better than what we then lived during these months. And that's for the presentation. I hand over to Giulia Perfetti so that she can manage the Q&A session. Thanks, everybody.

Well, we can start with the Q&A session. I remind you that to ask questions, you will have to book by clicking on the button at the top representing the end. The first question comes from Mr. Storer. Mr. Storer, I give you the floor. Please remember to activate your microphone.

Can you hear me? Yes. Thank you. Thank you, Julia. Thank you, Alessandro. My question is on guidance, a clarification on expectations for Q4 in particular. To which level of revenues you associate the 93 million because I understand that October was strong I still have to understand if the plus 13% includes the carryover from Q3 or not but we know also that December is going to be tough comparison and so I was wondering if all in all you were expecting for Q4 performance above or below or at the level seen in October. But even if this was the case, implicitly the implied profitability of Q4 would be particularly high. And so also on the cost side, I was wondering whether we should expect something different from previous quarters in positive, of course, to justify this jump. Thank you.

OK, thanks. So first point, we are not in the 13% growth of October. We are not counting the carryover from the previous quarter. That's our standard view. We have management figures, so what we bill every day, and then we have reported figures that are what we have billed plus the carryover from the previous quarter minus the revenue recognition to the following quarter. What we are mentioning here is that The carryover from the previous quarter from Q2 is normal. What we experienced was an anomalous level of carryover to Q4. And the 13% growth is management figures. So it doesn't take into account this carryover. It will be measured at the end of the year. And that's the first point. In terms of revenue growth, there are different scenarios that we're picturing. We are not really expecting a 13% growth moving to the end of the year because last year, December was particularly strong. Probably high single digit top line growth in Q4 could be the figure that we might see by the end of of the year um and of course the the final number uh in terms of a bit that will be to a certain extent impacted also by this number but in reality what we are counting on and what we're seeing is the real figure that is important in our numbers which is gross profit we have been working very hard in these last years to On one side, improve the profitability line by line, thanks to our customer satisfaction programs. And on the other side, we have worked hard as well to change the mix. Both product mix pushing more on devices, solution services, and less and less on screens. And on the other side, push more on IT resellers and less on retailers. In our plans, we see a Q4 where this mix and this impact on profitability should go on converting into numbers. And that's another important factor in terms of contribution to profitability. In terms of cost structure, we don't expect particular impacts from inflation in our GNA, we will have higher variable costs, but in line with what we experienced during the first nine months. And therefore, we do expect that really, if you make a bit of simulations, it really is a matter of understanding what the gross profit will be. But there should be a massive improvement in profitability. Not so much because of higher volumes. Yes, of course, for that as well. But because of the higher impact of gross profit margins. That's our expectations in this moment. And we have so far a good visibility on this. Then, of course, we'll see what will happen by year's end.

So another question comes from Mr. Robillard. Mr. Robillard, please remember to activate your microphone.

Hello, I hope you can hear me. Yes. Okay, so my first question is on inventories. So if we can just come back on that point and what are your implicit expectations for the year? You mentioned previous guidance was below 18 days of cash conversion cycle. Are you sticking to that? And what kind of comments can you bring on your expectations for the fourth quarter? as well in terms of liquidation of inventories becoming receivables. That was my first question. The second one is you mentioned quite a few times this carryover of orders from late September into the fourth quarter. If I'm not mistaken, you didn't quantify it. So can you give us an idea of what proportion of of revenue we are talking about. And then on 2023, do you have already some indications looking as well at your plan that you presented last year around that time? Do you stick to the expectations you did back then? Are there some updates we should be aware of? Thank you very much.

Okay, thank you. Well, I start from the last question. So far, we have not made any update to our guidance for long-term guidance. So we stick to our long-term guidance. Of course, having made an acquisition and having had experienced changes in the market, we will probably look into these figures sometimes during next year. and see if we need to make some adjustments. But as of today, I think the forecasts are pretty solid. We are executing in line with the strategy, so no need to change anything so far. Of course, some tuning might happen, not if not because of the acquisitions, but that's the position so far. The carryover, we mentioned it not so much for the revenues. It was a few tens of millions. I remember that we on average sell something like 17, 18 million euros per day. And the last days of the quarter, typically we have a spike, but this year we had, just to say some figures, we had days with three, four times the average volume. So there was this impact. And so it was material in terms of margin that potentially could have been booked in Q3 if we had sold them within the time needed to ship, to let the products arrive at customers' premises. So many hundred thousand euros of EBITDA. That's the impact. differential impact i would say again we always have this carryover as any company i i think here we are talking about an extraordinary level above the average and on the first question on on sorry and on this this is one of the reasons why we expected to have a particularly strong Q4 because part of it in reality was sort of generated in Q3 and was carried over into Q4, a portion of it, not all of it, because we expect if you do the math, you end up having a very, very big number for Q4. And in terms of inventory, numbers have been, well, Bad, it's the right word to describe them. I've been doing this business for 20 plus years. Last time we saw, and I saw something so bad was back in 2018 because of an issue in the market. And we have never witnessed something like this. There was all this pile up of orders to suppliers that were suddenly... released and we were flooded, not only us, all the market was flooded with products that were ordered in a pandemic time and they arrived in inflation and war time. So the worst possible scenario. The reduction in inventory should be material in the orders probably of hundreds of millions. the discussion internally is how much will be the level of funding that we will be able to get from vendors because although we have already structural longer payment terms but you need also to take into consideration the effect of the purchases that you will do during the quarter with which probably will be much less than what we would have done in normal times because of this usage of existing inventory So there should be a significant improvement of working capital. We keep on working the numbers but we don't have a clear picture yet. Numbers are so big that providing a target year is too complex. It's a function of what the sales will be in the next weeks and the volumes are enormous in this moment. So sorry, we don't have a clear indication, apart from the fact that this should be a material improvement in working capital. That's what we expect.

Thank you. Mr. Robillard, do you have another question or not? No, okay. Other questions?

Yes, so Gabriele Berti. Please remember to activate your microphone.

Hi, hello, good afternoon everyone. Thank you for your presentation. Could you please provide an update regarding your expectation on cost increases? I mean, what's your expectation about potential adjustments in personal cost in 2023 and also how much could be the impact arising from higher cost of debt, including the cost of factoring?

Well, we have not yet made a budget here and the increase of cost of people is a function of essentially three things. The level of new hirees, of new people and the carryover of the cost of people that were hired in the previous year but not day one, but during the year. So you will have costs that have been bad only for a fraction of 2022 that will be bad for the full year in 2023. The second is a discretionary pay raise. And the third one is inflation. Now on the first two, we are not yet out with the budget. We have made a significant step in beefing up our structure to address the growth in certain high margin areas. So a lot has been done, probably not all of that. But again, we have not yet finalized our budget yet. We are in the budgeting process in this very moment. As for inflation, well, it's not really into our hands. Inflation will be decided in Italy as well as in Spain and Portugal. by collective bargaining negotiations of the government with unions. And we are here waiting to see what will happen. So really, we don't really know. Probably, I expect that the impact during the course of the year will be higher than the previous years. So I would be surprised if the overall employee cost, all things equal, meaning no new entrances and no exit, no discretionary rise, pay rise. is not growing by one or at least one, two, perhaps three percent. It will all depend on the negotiations between governments and unions. I do hope that the government will try to absorb with subsidies some of the higher needs of cash for families so that we don't enter into a spiral of higher wages or inflation, but we don't We don't really know. That's where we stand with the budget. And that was the first question. It was only this one, I think.

And also the impact of cost of debt.

Sorry, yeah. I thought there were two. Yes, you're right. Well, the... Our funding structure is mostly long-term financing, which we edge with an interest rate swap. So our essentially fixed rates. We have been using sometimes short-term lines during the highest peaks of seasonality of our working capital and therefore needs of funding. So at least the short term, there should not be a big impact there. There will be an impact in gross profit because of factoring. The factoring cost will probably, the interest rate will probably rise by Let's say 3%, it's all around the increase in interest rates by the ECB, which will be soon transferred into higher factoring costs as well. So you could expect, say, an average 90 days payment time from customers. roughly one-fourth of the increased interest rate on revenues. So let's say 70, 75 basis points. This will be into gross profit margins for the portions that are factored, which are a portion of our total volumes. Needless to say, essentially on retailers where we have been not surprisingly embarked into a reduction of the weight because we Fear that sooner or later we might have had to bear an impact here. We will sit down and we are already sitting down with vendors first and foremost and with retailers as well. We will have to negotiate pricing that will take care of this objective additional cost. how much we'll be able to push downstream this cost as we did with freight. It's still to be discussed at the budget, during the budget process. We have been good so far. I hope that we will be as good as we were so far also in pushing downstream also this additional portion of cost. it's undoubtedly our strategies anyhow to grow the most profitable customer and the product lines and definitely if we will not be able to have profitable consumer sales of, say, PCs, smartphones, or other screens in general, which are typically mostly affected by these retail sales, we will have to trim down furthermore these volumes, as we did, we've seen it, slowly but constantly in these two years. Not because we want to walk away from there, but simply because we want to improve the return on capital employed profile of our company. So that's basically where we are.

Thank you very much. You're welcome. Any other questions? No raised hands. OK.

Let me just thank. There's another question.

Yes, another question from Mr. Storer.

Yes, thank you, thank you. Just just a clarification again on expected evolution for Q4 profitability. it's right to say that structurally Q4 for you is a weak gross margin quarter and so this could hold true also this year or maybe we should expect also considering what you've said before sort of inversion or divergence with the trend of previous years?

Well, yes, Q4 normally has an over-proportional weight of retail sales and of screens because of the So typically that's what happens. What we have been seeing and what we have been trying to do in these years and this year more than ever, is to progressively reduce the weight of this particular kind of sales, low margin sales. And I go back to the higher weight of reseller sales. And if you go back a few years, you will see that there's been a moment in which retail sales were more than 50%. And so, yes, we will most probably have, as usual, a Q4 with lower gross profit margins than the average. But in our focus, if all things will go as we expect and as we are working for, it should be slightly less depressed than usual because the mix keeps on going in the right direction and it's helping also the evolution of Q4. Then again, we'll see if we will be able to deliver, but so far we have been good at performing in line with our strategy. There are better or worse quarters, but that's what we are doing. But in general, that's what we are expecting. I hope I have addressed the topic.

Yeah, absolutely.

Thank you. Welcome. Any other questions? Not yet. Are there other questions?

Let me thank everybody before closing up, wrapping up. Thank you for the support. As always, we are available for calls if needed. And please let us also know if this new format with the presentation by Teams has been good enough in terms of performance. We have received the feedback from some of you to try this way and let us know. And thanks, everybody. And in case we don't have a chance to have a chat before, happy