Hexagon Composites Ord

Good morning and welcome to Hexen Composites Q1 2024 presentation of results. My name is Karen Romer. I'm the SVP Communications at Hexagon. And today we're going to cover the business highlights and then followed by the financial highlights of the company and then a market outlook. And joining me here in studio today is David Bandelli and our chairman, Knut Flack. I'd also like to point out we have an audience here in Oslo and also a digital audience. And for those of you in the room, we will have a Q&A after the presentation. And we'll accept questions from the room. And we ask you to please wait for the microphone that one of my colleagues will hand to you. And then also online, there is a section where you can input your question, and feel free to do that during the presentation as well. So without any further ado, I'd like to welcome Knut Flack to the stage. Thank you, Karen.

Good morning, everyone, and welcome to the presentation of...

Good morning and welcome to Hexen Composites Q1 2024 presentation of results. My name is Karen Romer. I'm the SVP Communications at Hexagon. And today we're going to cover the business highlights and then followed by the financial highlights of the company and then a market outlook. And joining me here in studio today is David Bandelli and our chairman, Knut Flack. I'd also like to point out we have an audience here in Oslo and also a digital audience. And for those of you in the room, we will have a Q&A after the presentation. And we'll accept questions from the room. And we ask you to please wait for the microphone that one of my colleagues will hand to you. And then also online, there is a section where you can input your question, and feel free to do that during the presentation as well. So without any further ado, I'd like to welcome Knut Flack to the stage. Thank you, Karen.

Good morning, everyone, and welcome to the presentation of Hexagon Q1 Quarterly Results. I'm here as a standing for Jon-Erik Engeseth today. As we announced in April, Jon-Erik is stepping down as CEO once we have a new successor in place. In the meantime, however, Jon-Erik is fully engaged as CEO, but he has decided to do less traveling for family reasons. And he excused himself for the meeting today. So I will do that. Otherwise, that would have been Jon-Erik's 43rd consecutive quarterly presentation. So quite a track record. Why don't we start with talking about what hexagon composites is all about? It's all about our vision, which is clean air everywhere. And that's two things. It's one, the green shift. to contribute to a zero-emission world. And two, it's about local pollution, to reduce NOx and particle emissions in congested areas around the world. And we're doing this by focusing on driving the energy transition from dirty, polluting fuels to cleaner and zero-emission fuels. And if we look at 2023, our own carbon footprint was in the range of 250,000 metric tons of CO2. but our solutions contributed to a reduction of 1.5 million tons of CO2. So in other words, six times as much as our own footprint. So we're delivering on that, and we are definitely moving forward in terms of achieving our overall purpose. So let's look at the key highlights for Q1. In Ragasco, we had the startup of the Linktra smart cylinder with the first serial production order for Linda. In Hexagon Agility on the truck OEM side, we had the first two orders, not the orders for us, but the OEMs announced their startup production from Q3, and they are open to take orders for those trucks. And then on Hexagon Agility Mobile Pipeline, we have achieved record deliveries and record results, and we also have a strong order book going forward. And last but not least, Hexagon Purus, which delivered their results on Friday last week, showing very strong growth and showing that they are on track for an EBITDA positive 2025. So what's the fuss about the... Lectra cylinder, the smart cylinder. As I said, it's now being launched in Norway nationwide. But it brings benefits both to the distribution company and to the consumer. For the consumer, it's about convenience. It's about knowing exactly how much you have left of the LPG in the tank. For the distribution company, it's about improving logistics, cutting costs, and making sure that your product is available for the consumers at any point in time. So we truly believe that this will be a game changer in the LPG market. We've taken the step from steel into composites around the year 2000, and now we're taking a step from bringing composites into the digital age and adding benefits to the product. So we believe this will improve the competitiveness of the product and contribute to a further conversion from steel to composites. And why are we so excited about the 15-liter engine? It's something to be excited about, isn't it? Engines. We don't make engines, but we make fuel systems for these natural gas engines. And as I said, in this quarter, two leading OEMs in North America announced that they are taking orders for this new truck with the 15-liter engine. It's Kenworth and it's Peterbilt. And together they have about 30% of the US market, truck market. And what's exciting about it is that in the past, we could address about one third of the heavy duty truck market when you had the nine liter and the 12 liter engine available. Now we can address the entire market. And there is a range of natural gas engines across the board so they can compete head to head with diesel. regardless of the size of the truck. And this is really the sleeper truck end of the market, the long-haul sleeper trucks, and they require even larger volumes to be stored. So in other words, it's even more business for us for each sleeper truck compared to a day cab truck. But if you look at the total market, it goes from 100,000 addressable to in excess of 300,000 accessible for us. And then you have mobile pipeline, which is also driven strongly by the introduction of RNG, so renewable natural gas. And it's all about stranded sources and stranded users, because the pipeline network doesn't exist all over the place. In the US, there is a big network of pipelines, but it doesn't reach out to all these sites where they produce RNG or where they need RNG for a filling station or elsewhere. So we invested a lot in the product range. over the last few years, and we've made significant developments that makes this product very competitive in the marketplace. And you can see that from the growth that has taken place from around, I think this was 46,000, sorry, 46 million in sales to 184 million in sales for the last 12 months in Q1 2024. And we're also seeing this product making its way into other geographies. So, for instance, the order we got from Promigas in Peru in Q1 of $9 million is a major step and a major event in that regard. And we do believe that this market will continue to expand. So that's why we are adding more capacity. And by September this year, we expect to have a 40% increase in our production capacity for mobile pipeline. And that's only with a $3 million investment. So it's a good return on investment. So with that, I think I'll pass on to David to go through the numbers and maybe give some more granularity also on the heavy duty trucking side.

Thank you very much.

Thank you.

So welcome to the financials section. And the first quarter financial highlights, well, they can be summarized with record high revenues in the mobile pipeline business. And these offset seasonally slow development in the fuel systems business, both within Hexagon Agility. So we did group revenues of 1.1 billion, roughly in line with last year. And EBITDA, we posted 77 million NOC for a stable EBITDA margin of 7%. I'm really pleased to say that 2024 is a renewal year for our loan facilities, and we've already executed on that. So the 30th of April, we have increased our facilities, giving us additional financial flexibility. So let's dive into Hexagon Agility. You can see stable revenues there of around about $900 million top line. But within the shares, if you look at the green and the yellow below, you can see that truck is low volumes year over year. Some of that seasonal, but also the other part of it are customers awaiting the 15 litre orders in the second half of the year. But you can also then see mobile pipeline increasing their shares to take over the truck volumes. And that's a significant part of Hexagon Agility. So we concentrate on the constituents of Hexagon Agility's revenues. So we have the refuse or garbage truck sector, the transit buses, the freight hauling trucks, and also the mobile pipeline. So four very strong legs to stand on. And all four are part of really driven by decarbonization in one form or another. If you take the first two, refuse and transit going through our cities, these are critical infrastructure applications. So we saw that in COVID. These need to run regardless. They run in the cities, transporting us to our places of work or other places of activity. As I mentioned, they pick up the garbage and hopefully take them to places where they're renewed into renewable natural gas. And as they operate in cities, they help reduce particulate matter and NOx, as you heard from Knut, so local air quality, as well as reducing CO2 emissions, harmful greenhouse gases. When we go over to the truck, it's the large fleets that have the decarbonization agenda. They are really pulling the demand for their decarbonization targets. And then we have the mobile pipeline distribution modules. We sell to customers. They use those modules then to pick up renewable natural gas and get it to the places where they're used. Again, the refuse, the transit buses and the freight trucks. So a very good loop and, again, very diversified revenue streams and agility. So with mobile pipeline share taking over from truck for Q1, we saw an improved EBITDA of 65 million over 34 million the same quarter last year. But let's focus a little bit more on the truck. So what is the process of adopting a 15-liter natural gas engine? We've listed the OEMs here who have publicly announced the start of serial production. And that start of serial production is the green light that everything is ready to go. So then orders can start from that point. You can say in parallel, Cummins have already approved the engine. Everything is good to go there. In parallel, the engine is also tested in the actual OEM truck platform. So this is normal within the OEM automotive industry and testing and validation, typically 18-24 month period. Once things go through testing and validation, you go into the pilot truck stage, of which we have already announced orders for our fuel systems on some of these trucks as well. And if it comes out to the pilot stage, which it does, it will tease out any other issues. And of course, soon as Kenworth, Peterbilt and Daimler publicly announce the start of serial production, then, as I mentioned, that is the green light for things to happen. And when we add Daimler, who is also going through testing and validation, to Kenworth and Peterbilt, who will start the second half of this year, Daimler are scheduled to come online then for some point in the beginning of the second half of 2025. And together, those three OEMs constitute then two-thirds of the North American truck market. So things very much on track. And of course, being the market leader with over 100,000 of these fuel systems already deployed, we have seen this pattern and have been very much a part of it and prepared for that accordingly. So way back in 2022, in earnest, we started the expansion of our facilities for increased cylinder capacity. The cylinder, the type 4 cylinder, is the heart of the fuel system. The pressure vessel is then the onboard storage of energy, the natural gas under pressure. We followed this development and currently we have truck revenue capacity of around about $400 million. We are about to conclude at the end of this year this expansion project. We will require just another $9 million to sink for these last nine months. And once we get to January 2025, our start of production date on the expansion program in North Carolina, we would have doubled our revenue capacity to 800 million, which seriously targets that demand curve that we see and puts us in a significant number one position or retains our number one position in terms of volume capacity to meet the demand. This takes us substantially through close to the end of the decade. And of course, we can then put new lines in the same footprint and increase that revenue capacity even further. So we're in a very good position as we come through 2024. Before we go into the outlook, I'll take a little bit of time on the other segments. Hexagon Rogasco in Q1 posted 143 million in revenues. Down from last year, we saw the same effects we saw in quarter four last year, where we've had destocking in the European market. In quarter one, 23, 188 million also signified when inventories were being built up post-Ukraine war and the winter that followed that. So unfortunately, we're seeing the reverse effect continue, but we expect that to normalize in Q2. With the lower volumes, lower EBITDA of 18 million, but still a 13% EBITDA margin there. Moving over to digital wave, they posted 42 million in revenues close to last year. Some softness in the UE, ultrasonic examinations business. That's cylinder testing of type 1. But strong momentum within MAE. Again, that follows. That's the type 4 testing currently heavily tested on mobile pipeline. And you saw the development in mobile pipeline. Very promising. On EBITDA, we've got some continued growth OPEX, so we posted a slight loss of minus one versus a slight profit last year there. So... Let's take the 2024 financial outlook, which is bright. Again, we expect truck sales to increase significantly in the second half of the year versus the first half of the year. So back end loaded. Why? Three reasons. One, the freight volumes and freight rates have been at a low level through 2023. And we expect that then also to start recovering the back end of the year. Number two, our major fleet purchases, they tend to buy truck in the second half of the year over the first half. And then finally, we have the X-15N engine, which will be launched as you saw, start to serial production for Kenworth and Peterbilt in Q3 of this year. One really exciting thing is the revenue opportunity from mobile pipeline with the expansion coming in line within Q3. That will give us the ability then to have higher revenues, not only year over year, but second half over first half. So exciting things there from mobile pipeline. And when we consider these factors together, we feel we will come in or land in the area of top line around about 5.5 billion and close to current published consensus. We are then very confident, especially with the scale-up of the 15-litre truck in 2025, that we would comfortably beat our 6 billion 2025 sales target. Looking at EBITDA, we will then expect margin appreciation with those truck volumes coming through in the second half of the year. And when we look at our profitability expectations, we feel somewhere in the area of 600 million NOC, which is also close to consensus. And again, that will set us up for a very strong 2025, where we feel the scale effects of the 15-liter, the increased capacity and sales possible in mobile pipeline, will then help us deliver on the getting close to the 15% EBITDA margin for 2025. And on that note, I will return to the stage, Knut, in order to look perhaps beyond 2024. Thank you, David.

Before we go into the future, let's take a quick look back in history. I founded Hexagon Composites in 2000. We went public the same year, and we had 112 million in sales. So it was a very small company at the time. Last year, we passed 5 billion knock-in sales. So it's been a journey over 24, 25 years of growth. And on average, we managed 18% growth during this period of time. And the main reason why we've been able to grow is the strong relationships that we've been able to develop with the large blue-chip customers in different markets. They have been driving the innovation within Hexagon. They have been making sure that we could actually grow and expand. Having a demanding customer is key if you want to develop. And that's exactly what these guys are. Over time, that means we have developed competitive strength, which is... quite extreme in some areas. We have on the technology and innovation side a track record that goes back all the way to the 1960s when composites came into use in the space industry. And we've kept nurturing that over time, and we have constantly added benefits to our products. But in addition to the product technology, we've also put a lot of emphasis on automation to make the composite products more competitive cost-wise, but also to make consistent quality over time. That's been key. And some of you have been to Rogosco, where you've seen the plant, which is state-of-the-art, it's fully automated, and it turns out cost-effective products with high quality day by day. And the same thing has now been implemented into the high-pressure area with more efficient manufacturing and more consistent quality. And third, we've become the world's largest producer of composite cylinders. What does that mean? Well, it means that we are far down the experience curve. We're multiple times the size of the nearest competitor. It also means that we have added a lot of purchasing power. And especially within carbon fiber, that is important, because carbon fiber constitutes a very large portion of our products. So we have a strong position, and we are ready to take further growth. And I'm convinced that we will see further growth in all our business areas in Rogosco due to the smart cylinder in mobile pipeline, which is already on a high growth trajectory in the digital wave area as well. And we will see it take place in the fuel trucking business. So let's do a deep dive into the fuel trucking side of things. This is a fact. Heavy duty vehicles accounts for about one quarter of the total road emissions globally. So it has to be solved. Today, natural gas is only about 2% of this market. Diesel constitutes the big majority, and diesel has to be replaced by something else. Of course, it doesn't have to be renewable natural gas. It can also be hydrogen. It can be battery. But it all depends on the size of the truck. It depends on the driving range and so on. And we believe a large part of this market has to go towards renewable natural gas. And we are well positioned. As of today, we have delivered more than 100,000 systems to trucks worldwide. And we have about 70% share of the U.S. heavy-duty truck market. For fuel systems, that is. So we're in pole position to take advantage of this growth that we expect to come. And of course, making forecasts is always difficult, but it's no... reason to believe that we won't see a strong growth going forward. And that's back to this 15-litre engine, which is now making the entire market open for natural gas. That didn't used to be the case. It was only a portion of the natural gas market or the natural gas vehicle market that could use natural gas. But with the 15-litre, that changes. And today, the market share is down around 2%, 2% to 3%. of the total market in the U.S. The expectations are that by 2030 that will reach 10% on the base case and 15% on the high case, which means we're basically multiplying the market by five in six years' time or so. Well, is it realistic? Yes, it is. And for two main reasons. One, the market drivers are getting stronger. And two, the barriers are being removed. So let's take a closer look at that. The number one driver is the need to decarbonize. The fleets, the OEMs, their customers, they're all asking for lower emission solutions. So they are driving the market. And the availability of RNG is key in this case. If you look at the development of production sites in the US, it's gone from 277 in 2019 to 531 five years later. And there is another 450 sites under construction or in planning. So this market is booming. and it opens up for the use of renewable natural gas in the trucking industry. Last year, 79% of all the gas used on the natural gas trucks in the US were RNG, so renewable natural gas. Another driver is the price difference between diesel and natural gas. And compressed natural gas has been lower cost than the diesel equivalent. And it's also been much more stable over time. And stability is always a good thing for those who are going to make investments in trucks. So this obviously impacts the total cost of ownership. And it makes it favorable to go natural gas versus diesel. The total cost of ownership used to be the number one driver. If you go back to 2014-15, that was the number one. Today, this is not number one. This is the number two or three. The first one is decarbonization need. That's the one which really drives the market. And then the barriers are disappearing. The network of refueling stations used to be limited in the past. Now there is sufficient network of refueling stations across the US to actually supply the gas needed for these trucks. And there are more than 1,500 in operation as of today, and it's constantly being added new ones. So this is not a limitation anymore. And the same thing with engine availability, as we talked about briefly earlier. In the past, it was only a fraction of the market that could be served by natural gas. That's not the case anymore. Now you can go head-to-head with diesel across the board, being it the 9-liter, the 12-liter, or the 15-liter. And the 15-liter is quite an interesting engine because, of course, it has more power, it has more torque, which is important for the heavy-duty trucks, but it's also 10% more fuel-efficient compared to the 12-liter. It's actually lighter than the 12-liter as well. So there is no wonder why some of the customers have been waiting for the 15 liter to come on stream. And that's created a bit of a vacuum over the last quarters and this quarter as well. But we believe that will change radically once the product is in the market. And as I said, they're now taking orders for it. And they've scheduled their serial production in Q3 and onward. And keep in mind also, this is not an engine that is brand new. It's an engine that has been in the Asian market for more than two years. So it's well tested, it's proven, it's ready to go. So the key takeaways. We are already an established market leader and we're serving the big blue chip customers globally. We are really well positioned to take a large share of this growth that we expect to come within renewable natural gas. And we are definitely on track for our 2025 target, so next year's target of 6 billion in sales and around 900 million in EBITDA. Last year we delivered EBITDA of 480. So it's quite a step from 480 to 900. Thank you. Karen, I believe there might be some Q&A afterwards. Absolutely.

Thank you, Knut. Thank you, Knut. Okay. And you can remain standing if you don't mind. Invite Knut and David back to the stage. And now is the opportunity to ask your questions. Thank you both for a good presentation. I have, yes, we have one question right here in the audience.

Of the three OEMs in the U.S. that has adopted the 15-liter, are you the sole supplier of gas tanks? If not, can you comment on your expectations of the market share in this area? And also, this engine has been on the market, as you said, in Asia for two years. Are those fuel tanks supplied locally, and could there be an increase in competition from that region?

First of all, if we take the last question first, the Asian market has been dominated by LNG, so liquefied natural gas, not compressed. So there is no real competition on the fuel system side there. When it comes to the first question, we certainly have some competitors, but we have a market share of 70%, which we've been able to hold now for a number of years. And yes, we welcome competition, and we believe that's important in order to keep us on our toes as well. But we don't think we will lose a lot of market share going forward, but we think it's going to be good to have other people as well involved in it, because this is a major transition, going from 2% of the market to 10% or maybe 15% in a few years' time. Thanks.

Could I just add to that? And you saw our revenue capacity when it comes to the cylinders, which is the key bit of the fuel system. That, by far, we are market leader. So, of course, we are heavily involved in the tender activity towards the 15-liter. Good. Thank you.

markets, and congratulations on an exciting outlook and good presentation. One question on Ragasco. It says in the report we will get some more conclusion on that by June. Anything else you can comment on during this presentation?

I can say we've had positive interest, ongoing dialogue, and as we said before, we expect to conclude with that end of June.

At the latest.

We do have some questions from our digital audience, so I'll take one while we think in this room. We have a question. I think this is to you, Knut. Can you elaborate on which kind of profile you're looking for in the CEO replacement process?

Well, first of all, we still have a very strong CEO in Jon-Erik, but since he has decided to step down, and prioritize his family more going forward. We have to look for a new CEO, and with the growth we're expecting and the presence we have in the international markets, I think it's fair to say that we should look for a candidate with a strong international background, someone who understands the U.S. market but is also capable of understanding the European culture. Because as a company, we're very much a, let's say, Norwegian and Nordic company, culture-wise. And I think there is a difference between different parts of the world. And we have to make sure that it's someone who understands both and is capable of managing a team across the different countries. So we're looking for a high-profile candidate, someone that can really take the business forward and make sure that we capture the growth that we believe is ahead of us but together with the team because we have a very strong team in place already and it's not like we want to change direction and make a u-turn or anything but we want to ensure that we strengthen our position even further i have another question from the digital audience um

Based on your maintained guidance, the business volume pickup is significant in the second half of 24. What's the upside and downside of scenarios investors should frame this in? For example, a slower growth in U.S. would impact business growth negatively and vice versa.

Hmm. If I can comment on the business growth, keep in mind it's not the total market that is the most important thing for us. That can go up and down quite a bit, but it's the share of the market that goes natural gas, which is important to us. And we strongly believe that that will really open up and grow strongly as the new 15-liter is now coming on stream. And there is no reason to believe that the 15-liter is not coming. It is coming because it's proven, it's tested. They're taking orders for trucks with that engine now. They promised deliveries from Q3 and onwards. And they need fuel systems. And I'm not saying we are the only one who can provide fuel systems, but we are definitely the number one supplier. We're the leader in this market. So I see very little downside in there. I see a lot of upside. And in all fairness, if you look at the numbers a few years down the road, I think that could change and become even more. If you look at the Chinese market and you go in and you take a look at what's happening there in terms of natural gas versus diesel, it's a dramatic change. But as I said also, that's LNG primarily. So it's not a product that we are in at the moment, except we have cryo-shelter, but that's more on the development side.

I can add that also we feel quite confident of the 2024 guidance, so where we have mobile pipeline also supporting the growth of the trucks.

And when David is confident, then, you know.

So we'll move on to a question about the 2024 guidance of 600 million NOC in EBITDA. What kind of capex do you need going forward? Q1 was 50 million NOC, and the 12-month run rate is 400 million NOC, while the last six months the run rate is 110. for example, 200, 250 NOC per year?

Again, we don't guide on capex, but I can say it's normal. You can say normal run rates, and then you need to add, you saw the $9 million that we need to complete the truck expansion in Salisbury and the $3 million for mobile pipelines. So if you add that to our normal run rates, you would get a reasonable picture. Mm-hmm.

Continuing on the guidance thread, the question in the 2024 guidance on revenue and EBITDA, does that exclude Regasco?

The 2024, does it exclude Regasco? No, of course not. So Hexagon Regasco is part of the Hexagon group as we speak.

Do you have any questions in this audience? Here? No? We have one there, yeah.

Just a quick comment on liquidity. Obviously, cash burn was high. There was various reasons for that, but one of them was the build-up of working capital. Do you see that continuing to Q2 as you're seeing the higher volumes coming in the second half of the year, or how should we kind of look at the trajectory for the very difficult...

Working capital can swing, but certainly you'll see an uptick in Q2. One of the reasons is that we want to be as quick order to delivery as possible, and we want to level load our capacity. So we'll be building, already building then in Q2, our fuel systems, which can be built to about 90% of the standardized level, and the rest of the 10% is customized by a customer. So we'll be doing that through Q2 to ensure that we are ready for the orders that come.

Good. We have a couple more questions online. How do you evaluate the background behind the sluggishness in the stock price, considering there's a positive outlook for future prospects?

I can't comment on the share price.

Thank you.

Well, I think that's up to everyone to think about. Take a look at the company, the performance of the company, the position the company have, and then look at the share price and make up your own opinion, whether it's high or low or whatever.

Thank you. We have another question from the digital audience. Can you please give some indication of CapEx and working capital requirement as you ramp up the capacity and sales for the fuel systems?

Again, we don't guide specifically on CapEx. I did answer that question before. On the working capital, of course, again, we have swings. Some of our businesses are also counter-cyclical. So it's all manageable working capital build, and certainly we have also additional liquidity capacity if required.

Okay. Continue online. And when do you expect the freight sector to recover and truck demand to increase?

Well, the data we've seen is from the second half of the year. But I will also say, Knut came into it, we are still a niche. As you saw, we're only around about 2%. So purchasing on natural gas doesn't necessarily correlate one-to-one with the full market. So meaning that we have big customers, and when they order, it's quite a binary and significant upside effect for us.

In a way, we've actually seen in the past that if the truck OEMs are very, very busy, they have a tendency of prioritizing the main engine, if you want, the diesel engines. If they have less activity, then they're much more open to actually get the new product lines up and running and introduce those products. So I don't think it's all that bad if the market is moderate for the time being, the total market.

Excellent. Okay, and the last question I have right here is, how do you view the long-term demand in mobile pipeline, and how do you plan to capture a larger share of the addressable market?

As I mentioned, we've already developed a very strong product portfolio, and we are definitely the market leader within mobile pipeline as well. That doesn't mean there is no competition coming up, and we have to always be aware of that and prepared. But I think it's a market which will definitely develop, and again, we are well positioned to take a good chunk of that market.

I mean, we see the big drivers being decarbonization and the renewable natural gas. So you saw the graph there of the uptake in RNG and the facilities continue to be built. So that's good. And there's always a lack of pipeline infrastructure. So mobile pipeline is perfectly positioned.

And it's also the fact that we see this expanding geographically. For instance, with the order from Peru for $9 million, that's a signal that it's not just North America. And we have to just make sure we focus on the other countries as well as the U.S. and Canada.

Great. Two more questions have come in online. So, David, is the 15% EBITDA margin a maximum? If not, what is the long-term target?

Fifteen percent. It's not a maximum per se, but we feel a very fair long-term level. We've explained before that we are in the OEM business and we are a new technology fighting against the incumbent technology, talking about diesel. And so it's critical that we are price competitive to actually reduce our prices over time and reduce the reasons to choose diesel. So we would go for higher adoption and staying at 15% EBITDA margin rather than increasing our margins over there.

Although, David, you used to be very happy with 20% EBITDA margin some 10 years ago or whatever it was. But I agree with you. You know, you shouldn't increase the price to a level where it starts, you know, reducing the market growth. On the contrary, I think over time you will see that both the engines and the other systems associated with these trucks will come down gradually because of scale. And that will make it even more competitive and the total cost of ownership even more interesting. Okay. Excellent.

And then one more question here, and that technical, where do we find the NOC 200 million investment in Hexagon Puris convertible bonds on the balance sheet?

Good question. It's actually in the fixed asset section.

Okay. Do you have any additional questions from the audience here? So if not... I think we'll say thank you very much for coming today, and thank you to our digital audience, and we look forward to seeing you also next quarter.

Thank you. Thank you so much.