Epiroc AB (publ)

Hello everyone and thank you for joining this Epiroc Q4 results presentation. My name is Karin Larsson and I'm head of IR here at Epiroc. We will follow the same presentation format as we always do and in short it means that our CEO and CFO briefly present I do, however, have some news today besides the strong results, because once our CEO, Helena Hedblom, has presented her slides, we will have the pleasure of having Håkan Folin, our new CFO, on stage. I'm very much looking forward to hearing them both. So, without further ado, Helena, please, the stage is yours.

Thank you, Karin. So with the COVID-19 pandemic still holding the world up and running. So we are monitoring the development continuously and we are taking actions where and if needed. And the actions taken the last two years have made Epiroc both stronger and more successful. Teamments and challenges. And in the end, it turned out to be a record year for Epiroc. High customer activity in combination with increased investment willingness led to record high orders received of 46 billion. So despite challenges with the COVID-19 pandemic and in the supply chain, our revenues increased and our operating profit and margin were record high. We had a solid cash flow and ended the year with a strong dividend of 3 SEK per share in line with our financial target of a 50% payout. We completed eight acquisitions and we launched groundbreaking innovations and made good progress in the sustainability, health and safety during the COVID-19 pandemic. So we have shown yet again that we are a strong team at Epiroc and we can adapt quickly to changes. And we are always ready to walk that extra mile to support our and all the engaged employees in Epiroc. So moving over then to some highlights in the fourth quarter. On the demand side, the pandemic does not seem to damper the activity level nor the investment willingness. Aftermarket performed particularly well. And I am convinced that our local presence with skilled service technicians and aftermarket support functions contribute to this development. The revenues came in at record high details later. On the sustainability side, one highlight was that our ambitious climate targets were validated by the science-based targets initiative. And this means that our industry-leading position within sustainability has the industry's transition towards reduced climate impact, and not the least with our growing offering of battery electric equipment. And today we have the broadest offering in the market, and we see good demand. Our strong orders received increased 25% to 11.6 billion, And this corresponds to 19% organic growth compared to the previous year. And acquisitions contributed with another 4%. Both in service, which is up 19%, and in tools and attachments, which is up 16%. Sequentially, the orders received decreased around 5% organically. But then again, we compare with a record quarter in Q3. The underlying demand and activity among our customers remains strong. Revenues increased 9% organically to record high 11.2 billion and our reported operating profit increased 17% to 2.40 million in positive one-time items and the adjusted operating margin was 22.9%. The margin was diluted from acquisitions. The constraints in the supply chain intensified, increased to 2.4 billion with a positive cash flow from working capital. And this is quite an achievement given that we are growing strongly. So to remain the leading productivity innovations, acquisitions and partnerships to strengthen EPROC's position. And starting off with innovations. So the remand program, which Jess Kindler told you about at the Capital Markets Day in December, new component, the customer returns a used component to us in exchange for a remanufactured component. It is a lower cost option while maintaining the highest availability and reliability. So following the strong electrification trend and also following the acquisition of Meglab, we have taken a step further than only just providing electrical vehicles. So to support customers in their transition of flexible charging products, including lifting tools to our offering. And this ensures that battery electric equipment can be charged at any given time or place. and if connected, cloud service. And speaking about acquisitions, another acquisition in the electrification space is FVT Research, which converts diesel-powered mining machines to battery electric vehicles. So we closed, we held 34% of the shares already before, and now we own 100%. So Mobilaris provides advanced situational awareness solutions that increase safety and optimize operations in mining and civil engineering. I'm pleased to welcome our new colleagues to the EPROC family, and we are looking forward to leverage our wider customer offering on a global scale in the coming years. Another topic we mentioned at the Capital Markets Day is fully implemented the first semi-autonomous integrated production level. And while a semi-autonomous production level can be seen at many operations across the world, this partnership is taking automation to a new level. And this takes safety and productivity one step further. And if you have not seen our Capital Markets Day, the webcast is available on our website. So please have a look. Which represents two-thirds of our revenues. It is resilient, profitable, and it's growing. And it's not all about a high customer activity, even if that definitely is a contributor to the growth. But I would say that we gain a customer share around the world, and this is appreciated by our customers. We also have an attractive offering. And in this quarter, we had good demand for midlife services or larger rebuilds. And rebuilds are good in many ways for productivity immediately. At the same time, it prolongs the life of the equipment, which is good from a resource and environmental perspective. The connected fleet is also growing, which makes us even better in helping customers with 6,000 machines now that have been delivered with connectivity. I cannot speak about the aftermarket without mentioning the supply chain challenges and if or rather when there is the lack of components, we do prioritize existing cars than delivering new equipment sooner. So in combination with our progress in the supply chain improvement program, we have actually managed to increase availability for our aftermarket, which is very good given the circumstances. Another focus, and to me and to us, it means that we want to do the right things and we want to do these things even better. So we have many initiatives ongoing continuously in our organization. First, we work to improve the supply chain excellence. Financial effect has been offset by increased transport cost. In administration, we constantly improve our way of working. For example, we simplify and have established regional centers of excellence to align administration processes. In order to be successful and to be the true partner of choice for our customers, we need competent and capable service technicians with diverse competencies. and therefore we focus on training, on certifications and share. We also focus on making our more than 100 service workshops more and more efficient in a structured way. We have made good progress in the sustainability area, both during 2020 of increased share of women managers and employees continued also in Q4. On injuries, we saw more lost time injuries in the quarter, while comparable total recordable injuries decreased. It is concerning that our employees and our customers are safe at work and come home after each day or shift. So therefore, we work hard with our initiatives such as Safe Start and Live Work Elimination. On a more positive note, the science-based, and with this our position as a sustainability leader has been reinforced, and more important, we contribute to keep global warming at a maximum of 1.5 degrees Celsius. The energy consumption in our operations increases. For comparable units, energy consumption increased 5%. And we have several initiatives that have been implemented to increase energy efficiency, but not enough to fully compensate for the higher activity level. The reduction is a very good achievement, giving the higher volumes. And this is partly thanks to a higher share of shipments by sea and road instead of air. So with this, I conclude this first part of the presentation and I welcome Håkan to this.

Thank you very much Helena. Hello everyone, it's a great pleasure to be here today and to represent Epiroc. I've spent now all my very humble and hard-working approach It's a fascinating industry to be in, and I fully share the view that Epiroc plays an important role in helping our customers towards sustainability and higher productivity. 15Q4 was higher than ever before. We reported an operating profit of 2.6 billion. If we adjust for items affecting comparability, it was somewhat lower, but yet the record high level of 2.55 billion. operating profit of 2.2 billion in Q4 last year, and it increased 17% up to 2.6 billion, including items affecting comparability, which were 40 million. These items include a positive revaluation effect of the shares, MCE, of 167 million. It also includes a change in provision for the share-based long-term incentive programs of minus 127 million. The operating profit was positively impacted by increased volumes. The adjusted operating margin was 22.9%. Supported a bit by currency, but diluted by acquisition, roughly about 90 basis points in the quarter. We continue to invest in these high-growth tech companies. You will find more details about them in the quarterly report. There you can also see that the finalized acquisitions during the year have contributed with 641 million in revenues and a negative 56 million in operating profit during the year. In services, demand was strong, as Helene already said. Orders increased by 27% to 8.8 billion, which correspond to an organic growth of 20%. And here we had a contribution from the acquisitions with another 4%. If we compare, if we look at equipment specifically, orders increased 28% to 3.8 billion and also here organically 20%. And we saw that order intake increased both for underground and surface equipment and in the quarter. And here I also want to mention equipment lead times. These are longer than normal, about one quarter on average, so now it's about three to four quarters. However, large variations between different type of products. This is due to delays in the supply chain. For service, orders increased 25% to 5 billion, 19% organic growth, and this was actually a record. Growth was supported by a combination of a high customer activity, several orders for mid-life service. Increased presence and strong offering has made us gain customer share. Moving over to revenues, they increased 14% to 8.5 billion, corresponding to an organic growth of 9%, also this actually being a record. And here we had contribution of what they will bring on a yearly basis around 90 million in annual sales. We normally have some seasonality tailwind on revenues in the fourth quarter, and I would say that so we did this year again. If we then move over, operating profit for equipment and service increased 18% year-on-year to 2.3 billion, positively impacted by this one-time effect of Mobilaris, as you already heard about. Acquisitions, however, diluted the margin in the quarter for the segment just over 1%, with relatively low revenues at the moment. But we do see good demand, and we look forward to see the future development of these businesses contributing to the growth of Epiroc. The reported operating margin for equipment and service was 27.3%, for the one of, though, it was 25.4%. If we then instead move into tools and attachment, this segment also had a strong quarter. Orders increased 20% to 2.8 billion for both hydraulic attachment and for rock drilling tools in the quarter. Revenues increased 16% to 2.6 billion, up 8% organically. And also here we had some support from the acquisition, 5%. Before moving on, I would also like impressive improvement. The adjusted operating margin was up 4.2 percentage point to 17.5%. Then back to the quarter. And here are the details of operating profit and margin for tools and attachment. And also from the acquisition already mentioned. And also the margin improved and came in at 18.2%. Solid improvement supported both from volumes and slightly from currency as well. Note that last year on this graph. We had high invoicing from the acquired companies. There was not really any dilution on the margin as part of the acquisition. Moving on then, I think it's clear to all of you that Epiroc is growing. Administration costs are linked to increased volume. For example, the cost for our distribution centers are booked here in admin costs. We also have more activities. In R&D, we have invested more than ever, more than 360 million. In relation to revenue, these costs were fairly stable at around 16%. The cost initiatives that we finalized already last year are still bearing fruit, and these allow us to invest in, for example, R&D, to allow us to invest in further value-adding initiatives. Net financial items were clearly lower than last year. Last year, we had a negative effect from exchange rate differences. Income tax expense was higher due to over. For Q4 specifically, the one-time profit from the Mobiliaris MCE shares lowered the overall tax rate since this is a non-taxable income. Our operating profit... Sorry, our operating... Payment of interest does vary between the quarters, and that's a little bit what you see here. We also managed to have a positive cash flow from working capital, which I would say is quite an achievement in this growth environment. Less positive than last year, but still positive for 2021. This was 97%. Coming back to working capital then, as I mentioned, compared to Q4 last year, the net working capital increased 15% to 12.2 billion, If we exclude if we do require more working capital when we grow, but in relation to revenues, we have improved. The average net working capital in relation to revenues decreased to 29% from 33.8% last year. Operating profit to 26.1%. Growth and acquisitions contribute to increased capital employed, while shareholder distribution and repayment of loan reduce the cash portions. And this is with and also distribution to the shareholders. And they combined have been more than the operating cash flow. We still have a strong financial position and we ended the year with a net cash of 1.3 billion. And this, of course, gives us good flexibility going forward with the cash that we are generating. Well, Epiroc's goal is to provide long term stable and rising dividend to its shareholder. And this is part of it. The board has proposed a dividend to the shareholders of three Swedish kronor per share. The proposal is to do this in two equal installments with record dates April 27 and October 24. In total, the dividend amount to approximately 3.6 billion. In the graph, you see a yellow bar. That represents the redemption proposed by the board this year. Before concluding the financial part, I would like to say thank you to Anders Lindén, my predecessor. And Anders, you have been a great support to me during these two months so far. So thank you very much for that.

And well done. This is the first result presentation for you. And we look forward to having you in the team for many more to come. And I also would like to say thank you to Anders Lindén and to repeat what I said. So thank you, Anders. So then, concluding Q4 briefly. So we create value for our customers, which is proven by the strong demand that we saw in Q4 with revenues and profit. We are experiencing continued and increased supply chain challenges, but we work hard to mitigate the negative effects. And to all employees in sourcing, logistics and supply chain, you are there and your efforts are not left unnoticed. We have finalized two acquisitions and in total eight in 2021. So a warm welcome to all 925 new employees to the EPROC, which means that our industry leading position within sustainability has been reinforced. And we have also seen several of our initiatives within sustainability bearing fruit. So we make good progress. So with that and our business partners, we achieve great things together. And onwards, what can you expect? Well, we expect that demand, both for equipment and for aftermarket, will remain at a high for taking the time. And now it's time for Q&A.

Yes, time for Q&A. Thank you, Helena. Thank you, Håkan. Both, excellent presentation. So, as always, please keep your questions short, and if possible, questions. A win-win. So, operator, please go ahead and open the line. Thank you.

Thank you. Our first question comes from the line of James Moore of Redburn. Please go ahead. Your line is open.

Hi, everyone. Hi, Helen, Håkan. Thanks for You mentioned the higher transport costs, and I wondered if you could in any way quantify the overall impact to the group in the fourth quarter versus either the third quarter or year or year, because you mentioned the word increase. And I wonder as we look forward into the first quarter and the first half of next year, quantify the three large orders. But more importantly, could you talk about where you think we are in the equipment cycle? Are we at the top of the cycle, or do you think there's more to go in the next few years with exploration and greenfields?

So on the transportation side and on freight, what we have seen though, the last quarter, we saw that we were forced to fly a little bit more than we had planned for. We also, of course, when you have disruptions, both on the out and the inflow, we also have some higher costs than this. So I would say it's not a lot, but it had an impact in the quarter. So that's on the freight side. On the equipment side, When we look at this, we look at the underlying for the last year, which is really good to see. What we have also seen is that customers are taking decisions to do brownfield investments, larger replacement orders, etc. So we have seen that during its bulk in nature. But when we look at the business cooking, what we have, you know, this this 18 months that we look into where are the projects in the world, it is very much the same. If we look and compare to previous peaks, I would not really compare it from a level standpoint. I would rather say that Today, the customers are much more focused on the technologies that we also, why we see good demand and good interest in both automation, digital products, as well as electrification.

Thank you. Thank you.

Thank you. Hi, Helena and Håkan. So a couple of questions, please. First on equipment orders. If larger orders were around 300 million, you said 300, 100 million each, then you suggest equipment orders were down around a relative to infra a little bit, at least in relative terms. So typically you're down quarter on quarter because of seasonality with less infra orders because of the winter. So I'm trying to understand. why it looks like mining weakened on an underlying basis. Is this simply because we're services, as you said before, prioritizing uptime rather than equipment? I'll start there.

I think if we look on the industry as such, it is very much focused on output. And there, of course, our aftermarket is a vital part. We talk about the large orders that are about 100 million, but there are, of course, many more orders that are mid-sized orders. I would say it's the lumpiness more that can impact between quarters. But it's good activity, high activities, both in Europe as well as in North America. And that we also see in the demand for hydraulic attachments, which is a very good signal of the actual activity levels out there.

All right. Can I just clarify on the large order comment? Did you say three orders, 100 million each, or did you say three orders, 100 million in total?

100 each. Above 100.

Above. It's on services then. Very good to see an increase quarter on quarter from an already high level. I'm trying to understand how much of this was pricing that perhaps got stronger towards the end of the year that boosted the 19% year-over-year organic and could accelerate more than the others. Thank you.

So we have a good pricing power, but it's always tied to the value that we can generate. So there is a price step. We are growing the customer share by understanding the fleet out there, by tailoring our offering, also using connectivity as a tool. What we have seen is that we are – And as I explained, we have also a strong offering here with remand centers, this type of product that really is a quick alternative to get productivity up and it's a good value proposition for our customers. So several of the builds supported the growth. But we step by step, every quarter also continue our work to increase the number of service contracts. So this is very much an ongoing, very structured.

Yeah, so it was mainly underlying demand that accelerated quarter on quarter rather than pricing. That's good to see. Thank you.

Thank you.

Our next question comes from the line of Lars Paulsen of... Thank you. Hi, Helena, Håkon, Karin. Maybe a first one for Håkon, an easy one to start with. Håkon, you gave some helpful color, thank you, around operating expenses in the fourth quarter, but it still looks like quite a material step up, $1.8 billion in the quarter. If I identify it, $1.6 billion or so over the last seven quarters. So we basically get back to where we were in Q4 2019, I guess the key question here is can you sort of try and help us understand how much of this cost ramp is perhaps more transitory in the fourth quarter? Are there some unusual sort of M&A costs or should we set ourselves up for a more sustained ramp in 2022, particularly in R&D? Thanks.

I think if you compare with Q419, you should remember that we have completed quite a few acquisitions since then, and they will obviously add a few extra items that we don't expect going forward. So comparing to Q419 is probably a little bit unfair, given that we are a larger business at the moment, but then also... Q4 was, I would say, a bit higher than what it should have been, could have been.

Given this is very much, you know, a straight correlation with volume growth. So when we grow the aftermarket, we also have a volume component in admin from logistics.

Understood. Secondly, if I can, Helena, a bigger picture question maybe on CERB over the past four years in your service business that compares to What I see is about sort of 1% mine production growth over the same period. I appreciate structural tailwind, of course, from lower oil grades, customer share gains, as you've highlighted, and some pricing. But it's still an extraordinarily strong growth part of your services. So the question really is how big is Made Life Upgrades Rebuilds today as a percent of services, and what's been the growth here over the last four years?

So I think we shared some of the numbers at the capital markets. The service products that we have launched during the last, I would say, three, four years supports the growth. So they are growing faster than, we'll say, the components if we look on parts or service. And I think by bundling parts and hours into something that adds more value than the pieces, That's really how we have been able to really get a good boost when it comes to products. That's key, but it's also, I would say, everything is linked. So it is the connectivity that we know where we have the equipment so that we can address any gap we have in supply. Also, it is very much linked to the fat market. We have also managed to capture a bigger share. So I think it's a combination of us being more specific when it comes to products and our offering to different segments. We have talked about that before, such as customer exploration customers, water well customers. It's a completely different type of customer dynamics and buying patterns. And we are much more... clear now in approaching these customer base in different ways to cap. That is really the biggest opportunity we have to, you know, to boost the aftermarket growth. But it's, of course, it's not really, we'll say, rocket science. It's very, very, we'll say, hard work and hope. You know, if we take a 10-year perspective, I think we are today much more professional in running the aftermarket for many aspects and that is paying off.

So if I say your midlife upgrade is 10-15% of services, it's tripled over the last four years.

Also the fact that we are step by step growing the number of service contracts. We don't talk so much about that because we don't book it. We book it as they come per month but we also step by step every quarter land more and more service contracts securing uptime for our customers.

Understood. Thank you.

Thank you.

Thank you. Our next question comes from the line of Andrew Wilson at J.P. Morgan. Please go ahead. Your line is open.

Trying to get a bit of an understanding as we're looking to 2022 and thinking about profitability, the supply chain program and I guess the other excellence programs that you mentioned, There's also been a lot of work which you might not necessarily have seen the benefit from, given that I think you've had to see if we were sort of bridging 21 to 22 in terms of margins, should we expect to see a benefit coming through from those operational excellence programs in 22?

I think we, as I mentioned, I think we always work with contracts, being it manufacturing or in the supply chain. But it's always a balance, you know, also to invest for growth. So we are, you know, investing heavily into R&D. You know, it's how to secure the future growth. So this is very much, you know, we do a lot of the operational excellence initiatives also to safeguard that we will be able to invest so much in growth, both being innovation, being in acquisitions or feet on the street and excellence. But we will always work with operational efficiency to allow us to invest in next horizon of growth.

Thank you. And the second question, it's more of a clarification now, the cost, kind of following on from James's question. I just wanted to clarify, do you think that the supply chain challenges have also had an impact in the deliveries that you were able to make in the Q4? I guess what I'm trying to understand is, without the supply chain challenges, lost or deferred sales, do you think you were impacted by in the Q4? Just trying to get an understanding of the run rate.

But there is an impact. We have not quantified it, but there is, of course, an impact. And it's mainly, I would say, on the equipment side, since we are prioritizing the aftermarket weekly basis, now how to prioritize when we have a shortage of components. So, of course, if you would do it the other way around, you would have higher revenue for equipment, but you would then lose out on the aftermarket.

Okay, so really all concentrated in equipment, just trying to think about kind of heading into 2022, what that looks like.

I would say so. I think it's also maybe good to remember that when we take larger rebuilds also on the service side, because that very often is then that you do a rebuild of a five machines, so you cannot take all of them from site at one time, because then the productivity goes down for that customer. So that is also a planned sequence or event, which also builds up orders on hand within service.

Thank you. Our next question comes from the line of Andreas Koski of Exxon BNP Paribas. Please go ahead, your line is over.

Thank you, and good afternoon. I would like to know how important do you think with business because you prioritize your aftermarket business?

No, I think we have competitive lead times. I think the situation is the same for all pre-times. So I don't see that we are not in lead times where we start to lose orders due to the lead time. It's still, as Håkan said, it's a couple of months longer than normal, which is not a lot.

Yeah. Sorry?

Go ahead.

Okay. Coming back to the service growth, how much did your new initiatives grow and how much did your... Really strong in... It's strong underlying activities.

It's strong contribution from new service contracts. It's contribution from rebuilds. But also growth in some of the sub-segments that we are focusing on. You know, growing the share on equipment that we have not served previously. So I would say it's a combination of all of them, and we have good progress.

With some spare parts business, that is also growing by double digits.

Depends on region, of course, and market and quarter. But I think, you know, if you look on it, I don't think you can compare, let's say, quarter by quarter, but when we look in all the sub-segment of our service business.

Okay. Thank you very much.

Thank you. Our next question comes from the line of Max Yates at Credit Suisse. Please go ahead. Your line is open.

For equipment and service business, the level or the share of equipment is as low as it's been, I think, since you've been standalone as Epiroc. So I just wanted to understand, given we're going into a year where equipment will outgrow services, how meaningful could some of these other supply chain improvements be given we're already coming from a sort of very healthy margin level. How should we think about that into next year?

I think if we summarize the year, clearly equipment has grown more than, so of course when we invoice those equipment, it will have an impact, it will have a mix effect. But at the same time, we are also doing a lot of work continuously to improve our efficiency in the supply chain, in adding to invest in the future also, given the situation we are in right now with challenges. So for me, it's extremely important to always work on the efficiency side, also to allow us to invest for the future.

sort of very healthy this year with quite a few acquisitions made. When you look at your pipeline, do you envisage that we could have a year, I mean, maybe not exactly the same number, but do you see this kind of rate of acquisitions kind of seven, eight per year or should we view this, sorry, when you look at your pipeline or should we think about this year as sort of relatively unique in terms of building out the business?

So we have done 19 acquisitions since the announcement of the split of actions. So that's also, you know, we invest organically for the future and then we complement it with strategic M&A. So I have good hope that we will be able to continue acquisitions as well in the coming years.

Okay, just one very final housekeeping one. Would you be able to call out how much within equipment and service, how much PPA? I appreciate sort of the acquisitions are diluted because they're lower margin, but I assume you're also taking more PPA above the line as well.

Correct. We'll look into that and come back if that's okay.

Okay, thank you.

Hi there. As mentioned, it's likely that price increases helps contribute to your sales growth this year. Given the comments on costs increasing, should we expect there to be greater price increases next year? And given this and also quarters that customers may have been pre-buying or bringing forward potential equipment and spare parts orders? Cool.

I think we have a good pricing power and it is always tied to the value that we lower cost. Our pricing power is good and we continue, of course, to use that. When it comes to pre-buying, I wouldn't say that we have seen it. We have seen it maybe in Q2, for example, next year or this year. So then we saw, of course, some customers pre-buying attachments, for example. But it's a minor thing, I would say. We have not seen it more constant. But we always have this type of cyclicality, I would say, when it comes to the infrastructure segment. We see that every year, more or less.

Okay, yeah, that makes sense. And just out of a kind of – how much of this is out of choice, or how much of this is just a function maybe of the challenge supply chain? Could you just break down a little bit more of moving parts there, and are you expecting it to stay at this low level?

I would say that it's obviously been by choice. There has been, before my time then, very hard work in terms of improving those terms and making sure we collect the outstandings that we have. So that's definitely been by choice. On the inventory, I would say it's a little bit in challenges. Elena talked about them in parts. I think there is still room for improvement. But all in all, I would say that the improvement is definitely to 90% or so by choice.

Great.

Thank you. Hello. Thanks for taking my question. I have one left. It's a follow-up on the equipment sales. I know you're prioritizing the off-the-market business, but how far are you right now from being fully ramped up on the equipment side with normally a normal seasonality minus some increased supply chain disruptions, or have you actually increased your capacity?

So we have ramped up our capacity. So we did that, you know, given the ramped up our capacity. So what is impacting us is this, when we have shortages and then the delicate decision to prioritize either component to the aftermarket or to equipment. But from a capacity standpoint, we are ramped up.

Okay, thank you.

Thank you. Our next question comes from the line of Nick Houston of RBC Capital Markets. Please go ahead. Your line is open.

Yes. Hi, everyone. Thank you for taking care of a few larger orders in the backlog now. And these presumably will begin flowing through to the P&L a bit more clearly in 2022. I'm just wondering, based on the delivery schedules that you've agreed with your customers, whether you can tell us how –

I think it will be spread out more across the year. It's not that there is a lot towards the end of the year or in a specific quarter. So I would say it will be spread out.

I'm just wondering if you can tell us if there are any sort of glaring technology gaps that you see that you were very eager to address with an acquisition?

So if we look on that's of interest for us, also, you know, targets related to automation and electrification is of interest. And I think when you look at what we have announced, you know, that is also highly interesting for us.

Understood. Thank you very much.

Thank you. Our next question comes from the line of Christian Hindorak.

Hello everyone, Christian from Liberum. Thanks for taking my question. Helena, you mentioned extended lead times for components and obviously that's been a factor that's required, I think, additional use of air freight. I know that's been a well-flagged issue but quite surprised to learn from elsewhere that even for simple products like hydraulic hoses, sourcing and procure from different component providers and maybe put another way, what proportion of the components that you procure are not interchangeable and hence where you're seeing long delays as a result? And then I'll ask a separate one.

So it's both to broaden the supplier base, you know, to use more suppliers than before. It's to redesign components to open up for more suppliers. We're also leveraging, of course, our manufacturing footprint. The fact that the regional players from a supplier base, that's also ongoing. So there's a lot of activities going into opening up and try to mitigate the shortages that we are experiencing. When it comes to... Some of the components are commercial parts, but a big portion of what we do is proprietary parts that we use, so proprietary solutions for all of the components everywhere. We have a part of the assortment that is commercial parts, but a big portion of the parts are proprietary parts as well. So then you need to do adjustments and you need to have R&D opportunities.

So everyone, sorry for interrupting this Q&A session. I know we still have a few analysts on the line. I know who you are, so I will reach out to you after this. Next quarter, you will not see me on stage. You will see my manager, Mattias Olsson, because I will, if everything goes well, be home on maternity leave within a few weeks. but I will send you all the relevant information to those of you that we have regular contact with. For those of you that stay at epiroc.com, we will do our best to help you with any questions or requests. So with this, thank you very much, everyone. Stay safe, and as always, we on the Epiroc side wish you successful investments. Thank you.

Thank you. Thank you very much.