Agfa-Gevaert NV

Hello and welcome to the AGFA Q1 2022 results call. My name is Jess and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star 1 on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero and you will be connected to an operator. I will now hand over to your host, Pascal Ejoueri, CEO, to begin today's call. Thank you.

Thank you very much. Good morning, everyone, and welcome to AXA's Q1 earnings call. I'm sitting here in Motsau with the other man, our CFO, Vivian Dictus, in charge of investor relations and finance. and the rest of the executive team of ACFA. So if we look at Q1, what are the key highlights I would like to comment? First, the level of demand overall for the group is still very satisfactory. and that translates into a good top-line performance, not only for offset, but digital print and chemicals, and overall in our markets, except specific pockets where we have a bit of disturbance from either a lockdown in China, supply chain issues, or other issues like the Ukraine-Russia situation. the overall level of demand is rather satisfactory for us. As you know, we are living through a very important inflationary context. And if anything, in 22, inflation has accelerated compared to 21, as we all know. In this context, we have been able to remain quite resilient in terms of gross profit margins. and we have been busy increasing prices in pretty much every line of our businesses. This translates on EBITDA with an increase of 22% despite this pressure and also despite some disturbance in the supply chain that hit us in Q1 and probably will continue to be a factor in Q2. In the meantime, we are continuing our transformation. We are now in execution phase of the IT outsourcing and partnership with Atos. Our key personnel is already transferred, I would say, in Europe. And as well, we have announced a new initiative in the reorganization of our financial services that we will be implementing over the next months. The one area that I want to stress as well is indeed during Q1, we had a surge of working capital and especially inventory that was a bit higher than normal, I would say. And we will explain that. And my message to you is it's going to get back under control by the end of the year for sure. We have specific reasons for which we see this spike in working capital. And we are already, I would say, in marching order to reduce it to a more normal level. But the gentleman will explain this. If I look at the numbers here in the P&L, What we are looking at indeed is a top-line growth of 7.2%. Actually, currency was favorable during this quarter. This top-line growth is also translated into gross profit. However, half a percentage point less than last year. I would argue this is pretty resilient given the inflation that we are going through. But indeed, it's a slight margin decrease. SG&S, selling in general and administrative expenses. You see a significant increase here for three reasons. First, we have selling expenses. We have the freight to customers in this area. And I would argue this is a variable cost that increases with the level of activity. And as well, this is the result of specific inflation in this area. Second, currency is unfavorable on the cost side due to the weakening of the euro. And third, this is the impact of inflation. In percentage of sales, it doesn't move so much, but it does create a significant increase overall on FG&A. R&D is stable. And therefore, we are able to post a significant increase of EBITDA compared to last year, and indeed a much better EBIT. Now, if I look below EBIT, of course, we still have a restructuring and non-recurring charge, which is in fact the cost of the transformation of the group, which is significant. And we will also come back to that in the outlook to give you a yearly outlook for this transformation cost. Well, now if we move on and explain a bit more the performance, of course, as you know, it's quite contrasted in a way. On top line, very good performance of offset and DPC. You will see it later, but offset is price-related, and DPC is activity-related mainly. There is a bit of price on DPC, of course, as well, but it's also activity and volume-related. As expected, you all remember, we had a record quarter in 2004 for healthcare IT, so we have a more subdued quarter for Q1, but that was... That was, I would say, planned and not changing the outlook for this business at all. And radiology, we had a good growth in VR, and we had a bit of a situation in the medical field, especially in China, in terms of volume and mix. We were a bit hit in terms of volume for the first quarter, especially in China. And indeed, we had a mix that was not favorable. So I would say that the first quarter for radiology is always a weaker quarter. This quarter is in line with last year, and we're expecting this medical field business to pick up as soon as Q2. And there is no significant price issue. It's more a mixed issue that we have seen in Q1. Price actions are in progress everywhere with satisfactory results. So overall, it translates into what I would call a resilient gross profit margin at 29%. We are not getting ahead, except in offset, but we are able to manage the inflation that we see. So offset, clearly we are turning the corner is the word that I would use after we had price increase number four at the beginning of the year. We're implementing, as I speak, price increase number five. And you see that in Q1 we have started to regain the lost ground in terms of margin. And I would argue that offset is a bit ahead of the curve compared to other businesses in ACTA. SKIT radiology solution, significant cost inflation as well. For radiology, it's more mixed effects that are impacting, that is impacting the gross margin. And for SKIT, at the same time, we do have a cost inflation, but we are also investing in our capacity to deliver our services. And DPC as well is impacted by cost increases and the overall mixed impact within the divisions. But overall, that translates into a 22% increase in this quite difficult context. Now I'm going to turn to free cash flow and leave it to Dirk de Maan to explain to you the components.

Yeah, thank you, Pascal. So overall, as you can see, quite a negative free cash flow for the quarter. despite better profitability but also strong and normal performance, let's say, on CapEx provisions, income taxes, also pensions. We start seeing the effects of the reduction of cash outflow thanks to the risking actions that we took over the past year and a half. But the key story here is the trade working capital where, as you can see, 54 million of buildup, versus December is quite significant, and I'll get back to that in a couple of slides when we talk about working capital. So if we move to the next slide, in terms of our cash position, we still have a very strong net cash position, although indeed it decreased primarily due to the working capital impact. And maybe to note also that impact there visible is also the share buyback, which was in the amount of around $8 million in the first quarter. But then let's move to the next slide on working capital. So, indeed, we are, let's say, back to a 28% of sales in working capital. The key impact is driven by inventories. And so, normally, in the pre-COVID period, AFA always has had a seasonal buildup in Q1, despite the fact that last year we actually had a decline in inventories because we were building down the excess stock after the COVID demand shock that we had built up. So it is normal to have that build up. But in this year, it actually is a bit higher than we would want to. And the first key reason, obviously, is inflation. So all the costs to make products have increased, not just the key raw materials like aluminum and silver, but everything is increasing. and indeed also the supply chain disruption that we continue to see, and that's a combination of two things. On the one hand, we have the true transport disruptions that cause more goods to be on the water for a longer period of time, so goods in transit are increasing, but on top also supply chain delays, which means that sometimes we need to wait for certain components before we can complete equipment and deliver it to our customers. So overall, I think it is indeed an increase. It is normal considering the circumstances. Also, receivables are increasing, but that's more driven primarily by activity. And I'm pretty sure this will also normalize a bit more over the next quarters. We will continue to do what we usually do is focus very hard on managing those levels over the year. and trying to find ways to mitigate the increase in working capital.

Thanks a lot, Dirk. Indeed, an increase that makes this quarter not a good quarter on cash, but we will work that out. This is a combination of seasonality, inflation, and supply chain disruptions. And it's been a focus for us in terms of – minimizing working capital as much as possible. We'll continue to have this focus, and I'm sure at the end of the year, we're going to be back to a more normal situation here. Now, if we turn to the business, and let's start with healthcare IT. So, again, a comment of a quarter that comes after a record quarter in terms of revenue recognition and especially bottom line. So a more quieter quarter here. You see stability of sales. You see a gross margin still at a very healthy level. You see the impact in SG&A of not only inflation but all moves to rebuild some of the capacity in order to be able to address what we believe will be a growing business and growing demand. And as well, that translates, therefore, in an adjusted EBITDA that is below last year. But once again, I would tell you that you shouldn't look at this business on an isolated quarter basis. And I stand by the outlook for this year, meaning indeed a kind of a consolidation year with a profit that's going to be an EBITDA that's going to be comparable to last year. But we have the ambition to turn now this business to profitable growth, and this is also the reason why we are reinvesting in some of our capacity. Good news as well, we have a very healthy order intake in Q1, actually increasing order intake, which is a very good sign. And order book is still staying at a very, very healthy level and above last year. So nothing is broken. It's just, as you know, we have different patterns for revenue recognition of our projects. But overall, nothing has changed on this business. Radiology solutions. So overall, you know, when we compare to last year, it's pretty much in line. Although the performance is a bit different within the division, it's really in line. And if you have the same pattern than the rest of the group, rather resilient in terms of gross profit, quite stable outside currency in terms of top line, resilient in gross profit. We did lose a bit of margin points, but this is due mainly to a mixed effect in the film geographies, actually in Q1. Same comment on SG&A, that's inflation, this is shipping, and this is currency. But overall, there is no drift in the way we are managing our costs, and a performance that is very close to the one of last year. So now, in film, let me say that Q1 is a seasonally weaker quarter, right? And again, I don't think there is a price issue. We are increasing prices as I speak in the film. I am not claiming that everything is fully implemented, but so far I would say we are seeing good progress. We do not have so much a price issue than a mix issue during 2021 that we expect to correct in the next quarter. And overall for the year, I expect radiology to be broadly in line with last year. So I'm not expecting any deterioration here. In DR, we had a rather good quarter in terms of sales, but the market of DR is still quite volatile in terms of order intake. So overall, I repeat, first quarter weaker, but just like last year, last year we picked up in Q2, Q3, Q4, and I would expect it to be the same this year. There is one caveat, one question on the demand for the medical field. and that's China. Indeed, if we have major lockdowns in China, that might impact the market demand. For the time being, it's not so much the case, even with the Shanghai lockdown. But if Beijing, for instance, would go into a lockdown, we would start seeing probably the impact on the market demand, but that's not yet the case today, I have to say. DPCs. DPC, so very good performance top line, but unfortunately not translating fully into bottom line. Indeed, in terms of inflation, in most of our activities, we are able to increase prices, but not in all of them. And we still have work to do in order to translate the higher cost into higher prices in some areas. Same phenomenon that you see in HG&A, especially across the board, shipping, currency, and inflation. Now, if you look a bit more in detail, in fact, we are quite happy with the development of the digital print business. Our specialty chemical range, like Orgacon for hybrid vehicles and Zircon membranes, are doing extremely well. PCD film is the one that does not go so well, volume and price. Volume, because basically we are hit by the China situation today in terms of disruption and COVID, and price, because this is probably where we lag a bit in terms of putting prices up effectively, but we're working on it. So overall, overall, well-oriented businesses, but the weight of inflation during Q1, we are still positive for the outlook for the year. The top line, that's for sure, but even the bottom line, we want to maintain that we are going to grow the bottom line of the business for the full 2022. Now, offset, well, offset a rather... I would qualify it as a good quarter given what we have been going through for the past couple of years in our state. When you look at sales plus 11.6%, 7.6% outside currency, all of it is price and mix. Our units are fully utilized, so the lever for us is really to target sales in high-margin markets, in higher-margin segments, and increasing prices. You see that we have turned that corner, and we remember that offset was the first being hit by the wave of inflation, and it took a bit of time for us to review our contractual arrangements. This is done, and now we can see the first result. So we're increasing those margins in percentage and in absolute terms as well. And overall, that creates, I would say, a good momentum in terms of profitability of the business. It's been a while since we have not seen such a quarter. So we expect this to continue. By the way, price action number five is in May. That will continue to support the level of the business. So happy with the price development, happy with the turnaround in this business, but this is not the end of the road. The goal is not to generate 4% EBITDA in this business. I sincerely believe that this is an industry that needs to deliver at least double-digit EBITDA level, and we will continue our price actions in order to get to this level. This is clearly our objective. It's not the end of the road, but at least it's a good milestone that was reached towards this goal. Now, if we look at the outlook, indeed, I would say it's almost mathematic. The inflation, the full impact of the cost inflation is coming in Q2 this year. On top of that, as you know, we navigate volatile or uncertain climate when it comes to China. The economic slowdown in China and the lockdowns are here, and it has an impact. And as well as the Ukraine-Russia situation, Russia sales for the group are less than 2.5%. But, of course, some of our businesses have been already impacted or stopped, of course, due to the situation. We are doing additional price action to continue to tackle the cost inflation. That's pretty much in place across businesses. Therefore, if I'm assuming that the current level of demand is remaining at the current level, meaning no deterioration of the overall market demand and economy, then we believe that the second half of 2022 will be better than the first half due to the additional action that will come into effect for the group. We will work on the working capital improvement, and we will get it back to a more normal level. That's for me a given. And if you remember, I mean, it has been a pattern that we had always. During the first half, we run our production unit pretty full. During the second half, we are adjusting production according to demand, and we will do that once again. And in the meantime, all the ongoing transformation actions that we are undertaking will bring some results starting in 23. And 22 is really the year of implementation and cost. Which is why I will now turn to Dirk again for him to give us an update, to give us an outlook on what you need to expect in terms of non-recurring and restructuring projects charge for 2022, the full year, and other considerations on the balance sheet of the group that we'd like to share with you.

Yeah, thank you, Pascal. So I just wanted to give you some perspectives, financial guidance. So first one, maybe minor, but in terms of cash outs for taxes, we estimated in 2022 to be below $10 million, so in the range of $8 to $10 million. With structuring and non-recurring, it will be a heavy year, so our estimate at this point in time is around $65 million. The key element of the program will be the continuation of the ICS transformation, indeed also the recently announced transformation in finance. but also the continuation of the standalone setting of the offset division and different efficiency programs that we have in the different divisions, primarily in offset and radiology. Thirdly, I would like to give maybe an update on the pension side because we've gotten some feedback from our actuaries around discount rates, and I know this is an important topic also in the press and in the markets in general. with increasing interest rates. So at this point in time, we estimate our weighted average discount rate to be at 225, which is an increase versus the 1.42 we had back in December. And we did a quick estimate on what that impact would be on the net liabilities. So not the gross, but the net liabilities. And we think at this point in time, it would be around 100 million improvements in our net position. So this is focused on the material countries. So as you may recall from the previous session we had, the material countries was around 617 million. So that would reduce it to 517 million. Now, obviously, this comes with a lot of caveats. This is a quick estimate. It excludes any other effects going forward. So, again, impacts like exchange, assets return, and all the other actuarial assumptions that have not been updated. But I just wanted to share at least an impact analysis that we did quickly to give you some guidance on that. And that's it from my side. Thank you.

Thank you. If I move forward, last but not least, a word on sustainability. As you know, we have embarked into a specific roadmap detailing specific sustainable development actions that we are committed to. The first one is around safety at work, and I'm happy to report a 56% reduction of the number of accidents with minimum one day lost in the first quarter. We have renewed, I would say, our focus on safety, and we are rolling out a number of programs, behavior-based or 5S, in order to make AXA a safe place to work, and it works out. Actually, we are doing better in the first quarter than our roadmap, but the overall direction of travel is really this one. Then we are launching a full... diversity and inclusion initiative. We have translated that for the time being as a gender equality drive in which we want to increase the representation of women across the company and more specifically as well in the leadership of the company. So we have given us the goal on the number of women that we are now hiring, trying to increase this and come as soon as possible to full gender parity. And last but not least, we are also very active in CO2 emission reduction actions. Actually, if I look what we have in place for this year in terms of actions, will probably be totally in line or more with the Paris Agreement to decrease absolute emissions by a few percent through diverse set of actions. For instance, in Belgium today, we are buying 100% renewable electricity. That's one of the actions we are taking, not the only one. And we are busy working on the CO2 reduction roadmap with the ambition, of course, to have a long-term view and further decrease CO2 emissions. We were recognized by ECOVADIS last year. We will continue to work on it and try to improve our ranking as we go. Sustainability is extremely important. The Sustainable Development Program I consider it as important as the economic results of the group, and we are truly committed to make it happen. And sustainability is good for the business. At the end of the day, this is what we need also to win in our markets. So in a nutshell, a quarter that is still marked very much by an extraordinary inflation impact that we are busy working out, a good level of demand, and overall the outlook for the year remains for me positive. It's going to be a year of progress for the group, even if the first half is probably a bit more impacted by the need to eliminate all inflation impacts. So I'm going to stop there and take your questions. So questions from the analysts are the ones that we will take. Operator.

Thank you. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. Please ensure your line is unmuted locally, as you will be advised when to ask your question. The first question comes from the line of Chris Kippers from DeGroote Petercam. Please go ahead.

Yes, good morning. Chris Kippers, DeGroote Petercam. A couple of questions from my side. Firstly, thank you very much for the insights on the pension liabilities. I think, indeed, it was a nice request of the market, so very clear on that side. Firstly, on radiology. You mentioned your press release. Hello? Yes. Okay. Okay. There was somebody coming on. You mentioned your press release on radiology. Of course, there seems to be no pricing issue. You are adapting. On the other hand, you say, indeed, Q2 should be quite well, but Accra needs to become more agile. So could you share with us what this in reality means, this agility? What are you missing, or is it just a temporal setback with clients, on the one hand, who are postponing decisions, and on the other hand, some hiccups, of course, which is logical in China, I would guess, on the other markets? Thank you.

Okay, for the pension, thank you for the comment. Indeed, we thought it was important to give you this perspective because we live in a world that is rapidly changing in terms of discount rates, and indeed it's important. For radiology, I'm not sure I fully understand your question, actually, Chris. Again, I repeat, for the film... We have increased or are increasing prices in pretty much, I would say, all regions. We cannot do it in China, but we are actually seeing a price increase from the currency appreciation in China. So we're not really being impacted by margins in China. What hit us a bit in Q1 is first, it's always Q1 is a lower volume quarter for us, and you see it. And second, we had a wrong mix, so to speak, a wrong geographical mix during the first quarter that impacted a bit. We sold more in lower margin regions than we sold to higher margin regions. So it's a mixed issue that will correct itself in the next quarter. Now, as I'm not sure I understood fully your question, if you have a follow-up, you can take it now.

Yes, just regarding the – if you look at the press release, what you mentioned in direct radiography, they state literally we are taking actions to increase our agility. I'm just wondering what that implies.

Yeah, but that's not for film. That's for DR. No, correct. Indeed.

That's for DR.

And DR, as I said, we had kind of a double-digit sell increase for Q1 and Indeed, but we are still working on the way to Indeed, get this business at scale, and therefore, yes, agility. But it's related to DR.

Okay. And then a second question would be a question for Dick on the working capital. If you look indeed, of course, we all anticipated some higher working capital, which is logic. But if you would exclude the normal level of inventory that you have in your company and you would exclude the pricing effect of that, how much is linked indeed to the slower evolution of the sourcing and the hiccups in the supply chain as such? Is it possible to split it up?

Well, it's impossible to split it up, but a good proxy, if you look in the inventory, is the number of days. And you will see in a year we have increased by approximately, I would say, about 10 days more of inventory. Actually, not even that, seven days compared to the end of Q1 2021. So you see that in a number of days, we are not holding a lot more inventory than before, although we are impacted by supply chain disruptions, as described very well by Dirk. But in fact, you know, take as an example offset. Aluminium has doubled in a year, doubled the price. So aluminum is probably half the cost of making a digital plate. So it means all of a sudden your cost in your inventory has increased tremendously. the unit cost of offset. So it's a combination indeed of cost inflation. It's a combination of the supply chain disruptions. But you see seven days more, a week more of inventory compared to last year. It's not like we are changing totally the way we are running the company. We are stressed by the supply chain. But there is also the impact of this cost. And if you allow me to go one step further, when you look at the cost of inventory, you look at the cost of inventory now. And when you do the ratio on sales, you do last 12 months. But last 12 months, that was also before the corresponding price increase. So you have a percentage of sales, you have a time where indeed it's going to increase. But again, on working capital, I don't think anything is broken. I think we had a higher quarter than expected. But we know what to do in order to get it back where it should be.

Okay, very clear. Just a last question, coming back on offset. You see a nice drop again in SG&A. What will be a run rate of SG&A going forward on an annual basis with the restructuring that you've done? Could you give an idea on that?

Wow. On the reduction of SG&A, no, I'm not going to get there on guide specifically on this. Okay.

But it's going to improve further, I guess.

Well, we are always looking at cost action. Yes, indeed. Yes, we will continue to do things in cost and especially in offset. We are not at the end of what we need to do, and the team is doing it quite efficiently.

All right. Thank you very much.

The next question comes from the line of Guy Sibbes from KBC Security. Please go ahead.

Yes, thank you. I have three clarification questions. First is on the pension. I presume the calculation you made was at the end of the quarter. The second question is on The restriction costs, it will be more back-end loaded in the year, so more of the costs will come in the fourth quarter. And then on the working capital, is it fair to say that it first will become worse before it becomes better, so that the second quarter will also be heavily impacted by this working capital impact, as you just explained on the roadmap prices as well?

Yeah. Thanks, Guy. So on the pensions, indeed, we took the situation, also the asset valuation at the end of Q1. So, indeed, that was the Q1 situation. On the restructuring, it will be moving forward over the different quarters. So, indeed, we did announce like the finance restructuring in Q2. So we're actually still into a social process, so we don't know the end conclusion. But I'm pretty sure we will take provisions in Q2 already, but some will come later in the year. So I would say it's maybe a bit spread over the different quarters. And sorry, on the working capital, the... And on the working capital at the end of Q2, actually... So I do expect that normally we see seasonality where also Q2 is still an increase versus Q1. So I indeed think we'll have a continuation still in Q2, but that is also a more normal seasonality. And one of the points to think about this is that actually in Q3, Out of the three months, there's actually, with the vacations and shutdowns and plants, maybe only two months of production. And in Q4 also. So during the first six months, we're actually producing more. In the second half, we're producing less. And that's also one of the reasons why you have that kind of seasonality building up. So indeed, a bit worse, but not drastically.

And indeed, we are still committed to – we ended up the year at 26%. You know, going forward, we believe that we can go below this in terms of percentage of sales, and we have the plans in order to do that. So it's a temporary pick-up that we are seeing right now, which is more seasonal than usual because it's compounded by all the supply chain issues and the cost inflation, but we're going to work that out.

Okay. Thank you.

The next question comes from the line of Maxime Stranat from ING Bank. Please go ahead.

Hi. Good morning, and thank you for taking my questions. Two on my end. First of all, on radiology, the quarter was indeed in line with last year, but if I recall correctly, the one of last year was abnormally weak given the change in procurement process in China. So just to have a view on what is the new normal for radiology. Is it something that will recur now every year, such a weak water, or do you see some improvement going forward? And secondly, on offset, You mentioned that you would target a double-digit EBITDA margin level at one point in time. Could you shed some light on the building blocks to arrive there and maybe a time schedule so that we can track the improvement over there? That would be all for me. Thank you.

All right. So in radiology, yes, indeed, it's a repeat of a weaker quarter, first quarter. And, yes, I think this is a new pattern that we are seeing. Actually, we have a weaker quarter in Q1 and Q2, Q3, Q4, rather at the same level and at a higher volume. Well, it's difficult for me to explain. This is the way the business works. And indeed, this is what we are seeing. So I don't know how to comment further. Regarding offset, yes, what I'm saying is, you know, basically we are now EBIT positive, but we are still at an EBITDA margin that is extremely, I would say, low. So indeed, my goal is to bring in as soon as possible EBITDA above 10%. Now the way to do it, price, price, price. I mean, that's clearly the first and foremost lever. And apart from that, we have a bit of self-help measures continuing to do what we've been doing, meaning reviewing our go-to-market. We still have a bit of a negative impact of IPAXA, the Spanish subsidiary that we're shutting down. That will start. So we have a few things we still need to do. But the main short-term lever to increase the profitability is to continue to put prices up. And this is what we are doing in May. And we'll review also our next actions. Now, in terms of timing, I would like to tell you as soon as possible. Again. I'm not going to give guidance on this, but as soon as possible we need to get it up, and this is really what we want to do with the team.

Very clear. Thank you for that. That's all for me.

The next question comes from the line of Alexander Framish from Kepler. Please go ahead.

Yes, hello. Do you hear me? Very well, Alexander. Okay, fantastic. So, hi. I have two questions. So, one was also on the pension liabilities. It's nice that you mentioned it. But just two of that. One, the pension liability, you say net pension liability. That means that you already calculated, took into account the return year-to-date of the assets. And then second, on the pension liabilities, Is it correct that it has not still been adapted on the balance sheet? Because I still see that the measurements on the balance sheet didn't change.

No, yeah, if I can quickly. So normally, and that's why I gave the update as an outlook point, right, because normally we do the update once a year, and we do that at year end, and it's a very intensive exercise with the actuaries. And so it takes a lot of time. It costs money. And normally we do that at the end, as we usually many companies would do. Now, given the context we are in, and also I know that Analysts would appreciate that kind of information. We did a quick estimate based indeed on the asset base also of Q1, what the impact would be net overall of the discount rate increase. So it is an estimate, and again, it only takes into account discount rates and nothing else. So it's not an accounting-grade quality estimate, but it gives a good indication towards, let's say, the overall sensitivity that we have on the net impact on our pension liabilities. Sorry, Anne, the second question was?

Yeah, no, you answered both. You answered both. Hi, Anne. So... And then the second question that I had was on digital printing. Could you confirm the closing of the acquisition that you recently did, and do you still aim for mid-teen EBITDA margins on this segment, or do we take the last quarter a little bit more as a... Closing, yes, we will close by the end of Q2.

We still have... We're trying to rush it to close as soon as possible. And, yeah, I mean, we are confirming what we say for DPC, yes, absolutely. I stand by it. And, by the way, you know, I was at Inca myself 10 days ago. I just, you know, coming back on the Inca story, so one existing line already in the market on which we're going to plug our services and inks as soon as possible, And as soon as we close, even now, we are preparing this. And that's enough to justify the deal. Now, the two other machines, you know, during the call, we probably used the wrong wording. These are not R&D projects. These are machines that are running. I've seen the machines running. There is one that is being built right now as a beta machine that in a few months will go to a customer and we have the choice of I would say. A lot of people are eager to test it. And the partnership machine with VHS is existing. It's working. I mean, it's about to be shipped in a matter of a few weeks. So these are not R&D projects. These are projects in the final stage of hitting the market. And in six months, both machines will be actually working at the customer site. Just wanted to make this point. So, yes, we are standing by it.

Okay. All right. Thank you very much. That was it from my side.

All right. If no other questions, we are going to stop here. Thanks very much, everyone. I wish you a good day. And, again, thanks for attending the call today. Thanks.

Thank you for joining today's call. You may now disconnect your lines.