ams-OSRAM AG (AMS) Earnings Call Transcript & Summary

Good day, and welcome to the ams-OSRAM Q1 '25 Results Credit Investor Q&A Call. My name is Regina, and I will be your Evercall coordinator. The format of the call includes prepared remarks from the company followed by a question-and-answer session. [Operator Instructions] At this time, I will turn the call over to Juergen, Head of Investor Relations from ams-OSRAM. You may now begin.

Thank you, operator. Good afternoon, Europe. Good morning to the U.S. I'm Juergen speaking. I'd like to welcome you to our financial and business update on the first quarter 2025 for credit holders and investors. Rainer, our CFO, will walk you through the updates. During the call, we're referring to an excerpt from the slides that we showed earlier on the analyst call and that you can find on our website. We also provide a comprehensive full Investor Relations presentation where you find further details. Rainer, stage is yours.

Yes. Thank you, Juergen, and hello to everyone. We are certainly staying on course in uncertain times. Our turnaround continues. We established the basis ahead of plan, more savings realized in the last quarter. The key driver for noticeably higher profitability in a difficult quarter compared to a year ago. Let us look at the financial performance of the group on Slide #2. Revenues came in at EUR 820 million, above the midpoint of the guidance, a sequential decline of 7%, pretty much in line with the usual seasonality across the board despite the underlying cyclical weakness. Seasonality was the clear driver in the auto lamps aftermarket business, whereas in semis, we saw more complex dynamics. Year-over-year, we are only down 3%, which is primarily due to the cyclical inventory correction in auto semis and the cyclical bottom in industrial and medical. Also, the nonrefundable engineering payments for the development of novel LED technologies contributed positively. At constant currencies and excluding the divested passive optical components business, the decline would have been 4%. Now profitability. Adjusted EBITDA margin improved year-over-year by almost 2 percentage points to 16.4%, 2% more EBITDA with 3% lower revenue. That really shows the improvement in our earnings profile due to the Re-establish-the-Base program and the nonrefundable engineering payments that we keep receiving. We're only down EUR 50 million quarter-over-quarter, less than the typical fall-through. You remember that in Q4, we reduced inventories, which lowered EBITDA. Year-over-year, we see a 9% improvement coming in EUR 11 million higher at EUR 135 million and this on a lower revenue base. Now quickly on the segments, and thank you, Juergen, for putting that slide together quickly. Auto semis came down 4% quarter-over-quarter, actually a bit better than expected. In short, nonrefundable engineering payments for our novel LED technology and support from the euro-U.S. dollar exchange rate helped balancing the negative effects of the typical January 1 DPA price down in auto semis and the revenue tailwind in Q4 from delivering on order backlog. Adjusted EBITDA stayed almost flat at EUR 49 million, coming in at 15%. Remember, in Q4 last year, we reduced wafer starts to bring down inventories, which impacted EBITDA and it kind of artificially lowered baseline. Then Sensors and ASICs. Majority of the business is in consumer, which saw only very small seasonality due to the strength in old and new products. Most of the quarter-over-quarter decline was due to an end of life of a custom product in industrial. Revenue is down 9% to EUR 236 million. If we back out the sold business of passive optical components that still contributed a year ago, revenues grew actually more than 6% year-over-year. Adjusted EBITDA margin came in more than 5x higher than a year ago, showing the structural improvement in profitability, thanks to our Re-establish-the-Base program. Quarterly, it dropped stronger than a typical fall-through as Q4 was elevated above the normal trend line due to one-off accrual effects and strong U.S. dollar. Q1, however, saw the typical seasonal factory underutilization and some negative mix effect as the customer kept ordering already paced-out low-margin end-of-life products. Lastly, Lamps & Systems revenues came down 9% quarter-over-quarter. The aftermarket continues to be good and is going through its usual seasonal cycle with the lows coming in Q2 and Q3. Within the EUR 249 million, again, around EUR 45 million of specialty lamp sales for industrial and entertainment applications, pretty much flat sequentially. A very favorable product mix, a onetime effect and good plant utilization pushed adjusted EBITDA margin to almost 25%, a great result, EUR 61 million compared to EUR 50 million in the December quarter. Now it's time to look at the end markets in the semiconductor business, we are on Slide #4. Semis in total came in essentially flat with minus 1% year-over-year. A 6% quarter-over-quarter decline is rather typical. This can be explained by looking at the main verticals, and that is first, automotive, our biggest exposure. Revenues came in 6% down compared to the previous quarter. Currency helped but also our new sensor products ramped well. The LED inventory correction cycle developed as per playbook during the quarter. Demand was still a bit depressed whilst we saw a book-to-bill of around 0.8 at the beginning of the quarter, which improved steeply to slightly above 1 over the course of the 3-month period. There is certainly a lot of uncertainty persisting in the supply chain. You can see this at the short-term ordering behavior, which is regularly below normal lead times. Year-over-year, we see clearly the LED inventory correction cycle taking its toll with 11% down in auto revenues. We see this particularly at the very short-term ordering of the OEMs as the fulfillment inventories and channel partners are in normal range. Second, Industrial and Medical. Horticulture revenues are at their seasonal low. The green shoots in terms of demand improvement at our biggest direct industrial customers are just noticeable in revenues. Street lighting is an important, normally very stable, application within professional lighting. However, last quarter, we saw the first project push-outs in the U.S. due to the federal budget cut. The distribution channel did a bit better in Europe and the U.S. China was weak. It still feels the cyclical low is reached with another quarter-over-quarter and year-over-year decline of around 10% each, but we must await any impact of the new tariff regime ahead of us. As mentioned before, a key driver for the reduction in Q1 is the end of the life of a specific product. Third, consumer, where we are mainly supplying sensors to smartphones and wearables. Typical quarter-over-quarter demand reduction. Year-over-year, we could even compensate the exit of the noncore portfolio by new products and ended up with a significant growth of 21%. The new products clearly kicked in but we also enjoyed some more orders for legacy products. For this, the typical seasonal reduction compared to the December quarter was hardly visible. And then Slide 5, let's talk a bit about products. We are very proud that further car models featuring our various products are hitting the street. The new Opel Grandland from Stellantis, a midsized SUV, comes with a 25,000-pixel forward lighting. It shows again the attractiveness of this solution not only for the high-end market. On top, one of the leading innovative Chinese EV makers has decided to launch the 25,000-pixel forward lighting in its latest flagship model. I will tell you more about this next quarter. And this is just the beginning. Further models from various carmakers will launch with EVIYOS on board in the quarters to come, gradually turning the significant design win basis of around EUR 500 million into revenue. Q1 saw not only EVIYOS making it more and more to the market but also other great developments. Let's take a look at Slide #6. Continuing with automotive. We are proud of a design win for hands-on detection with a major Chinese EV maker. It was chosen by a leading OEM as a key element for its intelligent driving system. Next, I mentioned a couple of quarters ago that we see opportunities in leveraging our ASIC capabilities into our automotive customer base. Now we are making the first inroads. We are providing an open system protocol LED driver chip to a customer that OS has been working with for many years on LEDs. And switching gears to Industrial and Medical, we could land a big design win in the X-ray sensor space for computer tomography at an aging customer. And lastly to consumer, we developed a unique optical heart rate sensor that features in a wearable device that allows for unprecedented precision, especially when you're performing sports. Unfortunately, we cannot go into more detail for confidentiality reasons, but we are extremely proud of this achievement and I'm sure some of you already own it. Moving on from the top line to the bottom line. The Re-establish-the-Base program has been pivotal in improving and structurally stabilizing our bottom line. I'm on Slide 7 now. End of December, our realized run rate savings stood at EUR 110 million. Implementation is pushed ahead without pause. As such, we can report about EUR 135 million of implemented run rate savings end of the first quarter. You will see the effect when we come to guidance on the next quarter. Just for completeness, we upsized the program to EUR 225 million run rate savings by the end of 2026 in Q3 last year. All necessary measures and actions to realize are identified. With that, it is time for cash flow on Slide 8. First quarter operating cash flow came in at just EUR 10 million compared to EUR 79 million in the December quarter. Several effects that are, in normal times, sometimes positive and sometimes negative, all happened to be negative in Q1. Inventories went up and accounts payable went down. Some customer payments came in a day or 2 late because the 31st of March was a bank holiday in Singapore, and we saw some negative effect from FX swaps. And finally, Q1 and then also Q3 had the big coupon payment. To compensate, we increased factoring while reducing reverse factoring. For the avoidance of doubt, net interest paid is included in the definition of operating cash flow. Now on CapEx, just EUR 52 million in the first quarter. That means a ratio of 6% CapEx to sales, well below our average target ratio of 8%. Looking at inflows from divestments, we recorded EUR 40 million in Q1 from selling unused land and equipment. Our free cash flow, the reported free cash flow ended up with minus EUR 28 million. However, without that bank holiday, we would be looking at a neutral or slightly positive free cash flow in Q1, which was my internal guidance to treasury. Moving on to debt, liquidity and maturities on Slide 9. End of December, we had EUR 1.1 billion cash on hand. On March 7, we paid back EUR 447 million to the holders of the '25 convertible at maturity with cash on hand. Consequently, our cash on hand position reduced by that amount to EUR 573 million by the end of March. Cash is also down EUR 20 million due to FX effects, and that is the holdings we have in U.S. dollar and Sing dollar. It's down because of EUR 50 million minority shares were tendered and because of the negative cash flow of EUR 28 million. In '26, bilateral facilities of around EUR 110 million will become due and then next bigger ones is the '27 convert in late '27. And as you know, in '29, we have the U.S. dollar and euro high-yield bonds. The value of the Malaysia sale leaseback transaction stood at EUR 429 million. It is actually down compared to the end of December due to the heavy devaluation of the Malaysian ringgit during the first quarter. As usually, you would expect it to go up because of the quarterly accrual of the part of the leaseback. This brings us to a slightly increased net debt position of EUR 1.9 billion compared to the end of December. The outstanding minority put options amount stood at EUR 570 million or 13% of outstanding shares end of March. As I said, minority shares with a value of EUR 50 million were tendered in Q1. And you know about our revolving facility that could, in principle, cover an exercise of all the outstanding put options. We take cash, the revolver and bilateral lines into account, our available liquidity remains very strong at around EUR 1.2 billion. And in addition, we also have quite a few unused factoring lines. On the right, you find the maturity table of our outstanding. Now Slide 10, deleveraging. We talked about this before and we have prepared this, and now the preparation is complete and we're getting serious about that. We want to get below 2x net debt to adjusted EBITDA as we have said before. To expedite this process, in view of the increasing uncertainties and economic boundary conditions, we now have a defined 5-pronged approach. First, we will continue to improve profitability and free cash flow yield through Re-establish-the-Base and growth in the core business. Also, as we already said, we will restrict CapEx to below 8%. By all of this, we will accumulate net cash over time. Second, we continue to expect selling the empty factory in Kulim and getting rid of the sale and leaseback. This is an active process but it is taking some time, given the volatile environment. There's actually no news compared to what we said before. Third, we are currently working with our banks on extending the revolver by 1 year to be on the safe side in case a large portion of the outstanding minority shares will be tendered after the final verdict in the appraisal case at the appeals court. And fourth, we are considering very strategic options for certain assets to generate cash well above EUR 500 million to speed up the deleveraging. This will allow us to cover a large part of the '27 convertibles and the amount of the minority shares potentially covered by the revolver. For the remaining low triple-digit million amount, we will find an adequate instrument. And fifth, on the back of the positive free cash flow, higher profitability growth and net debt below 2x, we will have a much improved implicit rating, which will allow refinancing the maturities at much better conditions. And ultimately, our goal is to bring the interest payments below EUR 100 million a year. Now let me summarize the key developments of the first quarter '25 on Slide 11. We delivered revenues and profitability above the midpoint of the guidance. Book-to-bill improved across all business lines to above 1. Execution of the Re-establish-the-Base progresses very well, ahead of plan. We paid back the '25 convertible and maintain a strong cash position. We continue to win new business at a rapid pace and our technologies ramped in the market, and I just explained our deleveraging plan. With that, let us look at Q2 and the fiscal year '25 outlook on Slide 12. For the second quarter, we expect revenues to come in between EUR 725 million and EUR 825 million. Guidance is based on the U.S. dollar exchange rate of USD 1.13 while the average rate in Q1 was USD 1.05, quite a significant step, and this effect will have a negative revenue impact of approximately EUR 35 million in Q2. Other than that, very well in line with normal seasonal patterns. Automotive Lamps aftermarket going into its annual soft demand phase. Automotive semi slightly improving quarter-over-quarter. Industrial & Medical is still weak but with signs of life, and consumer continues to go down seasonally in Q2 before then recovers in Q3. Altogether, semi revenues should come a bit lower quarter-over-quarter due to the weaker U.S. dollar in contrast to a year ago. In line with fall-through but with the Re-establish-the-Base savings making a difference, adjusted EBITDA margin should come in at 18.5%, plus or minus 1.5 percentage points. And for '25 the year, we continue to believe that the second half will be stronger than the first half. Scheduled project ramps are mostly unchanged. Also some pushouts do happen. Seasonality will also help in the second half. Obviously, the previously assumed market normalization is less predictable in view of the new U.S. tariff regime. In terms of tariffs, we are mitigating most of the primary impact by renegotiating terms with customers such that they pay the additional levies. If we decide to reroute production flows where possible and sensible, we may incur some transport costs, but this will not have a major impact on the P&L. The real question is, as the primary effects are mitigated, to what extent will global car production be negatively affected or will fewer smartphones be sold? We will all need to see how the situation develops as it continues to be highly volatile on an almost day-to-day basis. And looking at profitability, we continue to be ahead of realizing our run rate savings from Re-establish-the-Base. This will help stabilizing gross margin improvement and the bottom line as long as the more severe impacts from the tariff war do not become too big. And looking at cash flow, we continue to be very strict on CapEx and plan for less than 8% of sales, lower than our target operating model. Q1 came in at 6% as we mentioned earlier. Despite the lower predictability for the second half, we continue to expect free cash flow to come in above EUR 100 million, of course, including net interest payments. This includes the currently known impacts of tariffs and still has some bigger room for some further uncertainties in terms of top line. And this concludes my remarks, and we are ready to take your questions.

[Operator Instructions] Our first question is a live question from Tomas at Sarria.

Can you quickly just confirm the amount of supply chain financing that you have? At year-end, it was EUR 112 million. Can you just go through the exact amounts of what supply chain financing that you've got currently?

Yes, we don't disclose the exact numbers. As I said, you can see that we increased factoring, but we also took down reverse factoring at the same time to optimize the interest rates.

Net-net, would that be an increase or a decrease?

No, it's an increase in factoring. As I said kind of in Q1, there was a bit bad luck that everything went negative, things that are sometimes positive, sometimes negative. And it's a bit weird that inventories go up and at the same time, payables go down so we increased factoring a bit. Net-net, so we reduced reverse factoring, increased the factoring a bit more than we reduced the reverse factoring.

Okay. And then just on the inventories, how much of that inventory buildup was to place inventory into the U.S. before potential tariffs?

No, that wasn't the key reason, right? I mean, it was a bit, but as I said, it is basically that the customers are paying for the tariffs and also kind of U.S. in the end is not that large of an end market because I mean, most of our products go to Asia where they are then assembled into electronics. The reason that inventories went up is -- the major reason is that kind of -- I mean, we will see a significant uptick in the business in the second half of the year and supply chains can be -- in semis can be between 3 and 6 months. So you have to start preproduction so that we have the product available to sell in the second half of the year.

Our next question is a live question from Phillip at BTIG.

It's Phil from BTIG. I just wanted to ask around the strategic options for raising financing. Could you give an indication of the timing of any deal or deals, please?

I cannot give you a detailed timing, Phillip. As I said, the preparations have been completed and we will be starting talking to potential buyers. And once we have the feedback and once we know kind of what value is realistic, then we will decide which avenue to go forward.

All right. And would it be fair to say that you'd aim to get this done before the bond goes current, sort of before the convertible bond 12 months before maturity?

That is November '26, yes?

Yes.

That is certainly clear, yes.

All right. And in terms of the sort of alternative options for refinancing if sales don't reach your target, you mentioned sort of appropriate instruments. Should we think about potential mortgages or secured charges on real assets and convertible bonds? Are those in your toolbox? And is there anything else you might consider please?

Yes. I mean, the divestments are certainly part of the plan, and I'm very confident that we will be successful on that. And then depending on demand, I mean, we just said it will be above EUR 500 million. I mean, we didn't give an upper limit. There might be a smaller additional instrument necessary. That is obviously what we will decide then. Secured asset financing is not part of the plan.

Our next question is from Laura at MFS Investment Management.

I've got a few actually. In terms of the free cash flow guidance of over EUR 100 million, could you just maybe give some more color around some of the parts in terms of working capital development? What do you expect for the full year, for example? Is that going to be neutral cash source or cash use then cash taxes and cash interest? What kind of ballpark figures do you expect there? And just to confirm, does this at all include any of the grant that you will be receiving from the Austrian government towards the development of the production site in Austria?

Yes, Laura, that is correct. The grants are certainly included that we will receive. I mean, quite a bit of that coming this year and more coming in the next years. Cash taxes are around EUR 60 million. Interest payments are, what, a good EUR 200 million. And working capital, I assume, will continue to go up a bit and as kind of as we are preparing for the ramp in the second half of the year.

And then just going back to the grant because you said you will get quite a bit this year and then some next year. I think the total is EUR 227 million if you can just confirm that. And then should we expect to see half of that this year or is it more than that or less than 50%?

Yes. I mean, we don't have too much experience with the speed of the government so I don't want to give too much of a disclosure here what our expectations are. As I said, it will be a significant payment this year and more to come next and over next years.

Okay. But the total is EUR 227 million?

Yes, roughly.

And then final question just regarding those prepayments. I believe you're receiving the prepayments, and the expectation is to then use the money to obviously develop the products, et cetera. When should we see the sort of cash out for that, and is that included in your CapEx guidance?

Yes. The prepayment we received in last year and we will start repaying that in '26 over the course of 10 quarters.

And it's not against CapEx. You can treat it as incrementally like an interest-free loan.

Got it. and then sorry, last question in terms of cash exceptional items for 2025, can you give a ballpark estimate for that?

Well, you have transformation costs from executing our Re-establish-the-Base program and those are of the order of EUR 70 million.

7-0?

Yes. There is a question from the audience in written form so asking on the net leverage covenant in Q1. So it's well below the level. Rainer will comment on that. And the second one is the timing of the appeals court verdict on the minorities, which we continue to expect. Or best what we know it's not going to happen in the first half so maybe in the second half. Rainer, on the first one?

So the covenant was 4.5 and is coming down to 4. The leverage we are actually having is 2.7, so far away from that. Now the verdict, it is kind of -- we said in the second half of this year. Now it's probably May tomorrow and we haven't heard anything. So we are wondering if that is still true and we are trying to find out. But internally, we assume still it will be coming in the second half of the year, and we will let you know if there will be a further delay.

Our next question is a written question from Benjamin at Robus Capital. When is the final verdict of appeals court expected? And what effect do you expect with regards to the exercise of the remaining minority put options?

Yes. I already said that we expect in the second half of the year, though we're wondering if that's still true or it gets further pushed out, given that -- I mean, the majority is owned by professional investors, assuming that most of those will tender. But quite a bit is also owned by retail investors where we simply assume that half of those will tender in lieu of a better assumption. And that's kind of our internal planning, we use 90%. Maybe that is a bit pessimistic and maybe that some people will hold on in anticipation of a squeeze-out offer. But kind of just to be on the safe side, we assume 90%.

Our next question is a live question from Sidney at Citadel.

Just going back to the factoring and I understand you don't want to disclose the number. But if I look at the cash flow statement and think about how the factoring is accounted for here, the receivables going up by EUR 130 million, is that directionally the right amount of where the -- how to think about the new factoring balance?

Yes, it is certainly an indication for the factoring, but as I said, at the same time, we reduced reverse factoring quite a bit. And if you add that up, the number is actually quite a bit lower.

Got it, okay. And then help me out here. I'm having trouble bridging out to your 2x net leverage target. So in the slide, you show EUR 1.9 billion of net debt. LTM EBITDA, I think it's about EUR 586 million. If we deduct EUR 600 million for net debt, right, and I'm getting that number from your target of EUR 500 million from the asset sale, EUR 100 million of cash flow this year. So net debt goes to EUR 1.3 billion. That implies around about 2.25 on net leverage, which also doesn't assume any deduction in EBITDA related to the asset sale. And I understand you're kind of limited to what you can say about the asset sale. But could you maybe clarify like those numbers? Maybe I'm missing something, but how does that kind of tie to your target of under 2x?

Yes. There's one thing you certainly missed and that is around leaseback in Kulim that will go away once we sell the factory, right? So you can deduct that and that would also kind of help the EBITDA a little. And then kind of -- I mean, the EUR 500 million is certainly kind of the lower end of our expectation. And in our target setting, we have used a more realistic assumption on what proceeds we are expecting, which is not a number that we want to disclose today.

Okay, I guess that makes sense. Maybe also direction, can you guide to like the expected amount of EBITDA that you would sell that you're assuming?

No, not at this point in time.

Okay, fair enough. And then I guess last question, I guess, again, going back to timing and I understand it's difficult to answer at this time. But just given the put option, if and when there is a court decision out in the second half of this year, how does that kind of tie into your thinking around the strategic alternatives to deal with the balance sheet?

Yes. I mean, it's kind of -- I mean, we have always been assuming that 90% of our outstanding shares will be tendered. We have cash flow that's positive and you also have the revolver to catch that. And then kind of when we think about the refinancing then somewhere in the second half of '26, right, there will be the disposal proceeds. And depending on the exact amount, there might be another smaller instrument that we will require for the refinancing.

I see. Sorry, and maybe just clarify, is the right way to think about it, therefore, you probably need to get the asset sales done in order to fulfill any obligation tied to the put obligation?

No, no, no. It is -- there's no correlation to the revolver and the minorities. It is just more kind of the November '27 convertible that will become current in November '26. That is more kind of the latest point of time when we need to have it completed.

Our next question comes from Colin at BPM America.

This is Luke on for Colin. I just kind of wanted to poke into the segments a little bit. What gives you confidence that Industrial & Medical is kind of reaching that cyclical trough?

Yes. I mean, we have some visibility into orders. We also have some visibility into inventories. There's certainly, as we had disclosed previously, there was a lot of excess inventory and we have seen that coming down. And there is kind of -- we don't expect a steep recovery, but there are some green shoots that are visible and kind of, if you talk to customers, they certainly see some light at the end of the tunnel.

And are there any particular kind of sub-verticals within that, that are seeing different parts of strength and weakness?

We have some sub-segments of industrial where we see it's certainly auto medical. Medical is certainly one of the areas where we see a bit of improvement, also obviously, baked on some design wins and some major design wins that are kicking in.

And then do you have any visibility, I guess, on the auto side that's still going through a correction? I know some other auto semis seem a bit more optimistic but I know they're playing in different types of products.

We certainly, as we said, the book-to-bill is now above 1 across all. In auto, it is maybe at 1.2 and still improving, right? So we see the improvement. It would certainly need to go up a bit further to reach our expectation for the second half. But that is typical for kind of that situation, right? You would see every week a bit of further improvement. That's what we are currently seeing. We are not that yet there but that's going in the right direction. On the other side, you have this tariff thing where you wonder if all the kind of the end market effects are yet fully visible, right? Kind of IHS reduced their forecast for the year by 1 million cars or so. If that is the right number, then certainly the impact should be very limited. But who really knows if there's more impact to be coming? And there's certainly also the question kind of what is the next step in the tariffs, right? I mean, currently, the tariffs are reduced to 10%. The reciprocal tariffs of auto at a good 20%. But what is the next step, right? Will it come down? Will it go back up? That's difficult to say.

So I guess so far with that improvement in book-to-bill from 0.5 to a little over 1, how much of that is due to kind of a normalization from lower orders in Q4, which I think you mentioned on the main earnings call versus like a more supportive inventory?

Well, I mean, you have to think it through maybe so we always said a typical LED inventory correction lasts for 3 to 4 quarters. So initially, you see book-to-bill and revenue going down, which we saw around the turn of the year, it was 0.5. And now it seems that particularly at the Tier 1 customer, their inventories are run down and you see book-to-bill up. Why do we think so? First of all, they order on very short notice. And secondly, maybe 40%, 50% of our automotive business, the warehousing is done from channel partners like Arrow, Avnet or whoever. And there, we have a few on their inventories and they hardly move. They're always between 8 and 10 weeks, and compared to 3 months ago, it was just a few days left. So we basically feel that it reflects the real demand. So before the tariff thing, our greatest worry was that an immediate snapback in demand plus replenishing of their inventories, which would have brought us rather into a shortage or allocation situation. So from that, yes, I mean, we basically pretty much follow what they need. So even if you model a somewhat lower car production, car sales in the second half, yes, it's probably not the end of the world. I mean, 1 million cars, we typically model top down with maybe EUR 12 million to EUR 15 million revenues on the top line. And then yes, you have to fall through. But if you assume 1%, 2% down because of all that or even 3%, well, you can do the math. Yes, it's a number but it's not the end of the world.

Our last question comes from Teo at Pictet Group.

I just wanted to clarify 2 things. One is the EUR 500 million in proceeds that you mentioned or at least EUR 500 million. Does that include any proceeds from the Kulim facility or is that separate?

No, that's separate.

And from the Kulim facility, given you have a sale-leaseback already on the property itself, should we expect any substantial proceeds? Because again, you're not technically the owner of it, right?

Yes. I mean, technically, I would look at it that we own it but we have pledged it against for a loan. That's probably the best way to look at it. We could cancel it at any time with a small penalty payment. So I would look at that way. Kind of if somebody would take it over at the current value, which is around EUR 430 million, and there would be no additional cash payment, then what would we book? We would book EUR 430 million positive cash flow from proceeds and, at the same time, a negative cash flow or negative financing cash flow. And that is if there's no cash payment between the buyer and the seller of the facility.

Okay. And when you say you book a negative financing cash flow, how much is the sale-leaseback facility worth now then in terms of how much you would have to repay if you do get out of it?

No, if the buyer takes it over, right, then they would assume the EUR 430 million liability and it would disappear from our books.

All right. More questions?

This concludes the Q&A session of the call. Handing it back to Juergen from ams-OSRAM for any final remarks.

Yes. Thank you, everyone, for joining this call and your questions and your attention. And if there are further questions coming up, please do not hesitate to contact us at Investor Relations, and we will try to get back to you as quickly as possible and help you with that. With that, thank you so much. Have a great day, and we'll be speaking again in 3 months from now.

This concludes today's Evercall. A replay will be made available shortly after today's call. Thank you, and have a great day.