CRH plc (CRH) Earnings Call Transcript & Summary

Hello, and welcome to the CRH April Trading Update. [Operator Instructions] I will now hand you over to your host, Albert Manifold, to begin today's conference. Thank you.

Good morning, everyone. Albert Manifold, CRH Group Chief Executive here. And you're all very welcome to our conference call this morning, which accompanies the release of our trading update in advance of tomorrow's Annual General Meeting. Joining me on the call is Senan Murphy, our Group Finance Director; Frank Heisterkamp, Director of Capital Markets and ESG; and Tom Holmes, Head of Investor Relations. Given the current circumstances, we're all in different locations and dialing in remotely, so please bear with us over the course of this morning's call. Following some short opening remarks, we'll be available to take any questions you may have on our announcements. We have approximately 30 minutes scheduled for our call, and we aim to finish up at about 9:00 or so. Now before I take you through the key points of our announcement, I'd like you -- I'd like to take this opportunity to acknowledge that this has been a very challenging and unprecedented time for all of us. Our thoughts are, first and foremost, with all of those affected by COVID-19 and the people who are on the front lines dealing with this global health emergency. As ever, the safety of our employees, contractors and customers is our #1 priority. And every effort is being made to ensure that we provide a safe working environment for them to carry out their activities in accordance with the various public health and safety protocols currently in place across our markets. Our businesses across the group are deeply embedded in our local communities. And in an effort to help them wherever we can, several of our businesses are donating personal protective equipment and other essential supplies to help local hospitals and communities deal with this crisis. The global spread of COVID-19 has significant implications for the economies and construction markets in which we operate. We're following the advice and direction of the World Health Organization as well as government and public health authorities across our markets, and an extensive range of business continuity measures are in place across our operations globally. This includes enhanced safety and sanitation protocols as well as adjustments to work practices to ensure social distancing is observed. In an effort to slow the spread of the virus, governments around the world have implemented various restrictions on public gatherings, the movement of people and certain business activities, including construction. The impact of these measures on our operations has been visible since the middle of March. However, the severity and the operational impact of these restrictions vary significantly from country to country. In North America, while emergency restrictions have been implemented in all U.S. states, construction has been deemed an essential activity in most of our markets and is permitted to continue provided appropriate safety measures are implemented. At this point in time, our operations in the Southeast, Central and Western United States have been less affected, while our businesses in Pennsylvania, New York City, Washington State as well as Ontario and Québec in Canada have been impacted by government restrictions on construction activities in those markets. Nevertheless, healthy backlogs and a favorable bidding environment continue to provide support for our business. And although the situation remains fluid, we are starting to see early indications of restrictions being lifted across a number of markets. Our operations in Europe have been more impacted to date with nationwide shutdowns implemented across a number of Western European markets, including the United Kingdom, France and Ireland. As a result, operations in these markets have been significantly impacted in recent weeks. In contrast, in the absence of nationwide restrictions on construction activity in our Central and Eastern European markets, our businesses there have been less impacted to date. In the Philippines, government restrictions implemented in March have resulted in significantly lower cement volumes and activity levels. Turning now to our trading performance for the first 3 months of the year. And notwithstanding the evolving situation with regard to COVID-19, the group had a positive start to 2020. Group sales for the first quarter were 3% ahead on a like-for-like basis, reflecting a positive underlying demand environment in our core markets and continued progress on pricing across our businesses. I'm now going to take you through each of these businesses in turn. Starting with the Americas Materials division. First quarter like-for-like sales were 8% ahead compared to 2019, with good underlying demand and milder weather conditions in our North and Western regions providing support of higher volumes and prices across all product areas. Turning to Europe Materials. Our like-for-like sales were broadly in line with the prior year as a solid start was offset by the impact of COVID-19-related government restrictions being implemented across a number of our major markets, such as the United Kingdom and France, towards the end of the quarter. And finally, to our Building Products division. Our like-for-like sales for the first quarter were 3% ahead of 2019. Favorable volumes, together with pricing progress across most platforms, was partly offset by the impact of government-implemented COVID-19 restrictions on a number of our operations in Europe and North America during the last 2 weeks of March. So overall, as I said, a positive start to the year. But of course, quarter 1 has long since faded in the rearview mirror. In these, unprecedented times, we are firmly focused on protecting our business, mitigating any potential adverse financial effect and ensuring the group is well positioned for future recovery in our markets. We have a wealth of experience across the group, and our management teams have been through periods of uncertainty and business disruptions several times before. At times like this, it's crucial that we take immediate and comprehensive early action. And in our announcement this morning, you can see just some of the measures being implemented across the group. We suspended all nonessential and discretionary expenditure. We're restricting capital expenditure only to essential maintenance levels. Strict working capital management measures are being implemented across all of our businesses. Significant cost and restructuring actions are being taken to rightsize our businesses in line with evolving demand levels. As before, we're consolidating our operating locations as we adapt to lower levels of production activity. A group-wide recruitment phase has been put in place. We've implemented temporary layoffs and furlough arrangements in areas experiencing significant demand weakness, and we've implemented 25% salary reductions for all leadership teams and board members. This should give you a flavor of types of initiatives that are underway across the group, but this is a very fluid situation and further actions will be taken as required. You've heard Senan and I talk about the financial strength and discipline of CRH many times before. But at times like this, in periods of crisis and uncertainty, and balance sheet strength and liquidity make a real difference and are absolutely crucial. In this regard, we're in a very healthy position. With the year-end net debt-to-EBITDA ratio of 1.7x, we entered 2020 with significant cash and liquidity available to us. And having taken the proportionate decision to draw down our EUR 3.5 billion credit facility, we now have current cash, cash equivalents of over $6 billion. This is sufficient to meet all maturing debt obligations for the next 4.5 years. And our remaining debt has a weighted average maturity of over 10 years, so we're well covered from a liquidity perspective. Now before I turn to outlook, let me briefly touch on some important updates from this morning's announcement. In March, we announced the completion of our most recent phase of our share buyback program, returning a further EUR 200 million to shareholders and bringing the total cash returns under our share buyback program to EUR 1.8 billion since its commencement in May 2018. In light of the recent market volatility, the Board, however, has decided to postpone our share buyback program until further notice. With regard to the dividend, and as announced in February, the Board has proposed a final cash dividend of EUR 0.63 per share for consideration of shareholders at tomorrow's Annual General Meeting. Finally, turning to outlook. The global COVID-19 pandemic is expected to have a material impact on economic and construction activity across our markets in 2020. Due to the unprecedented level of uncertainty regarding the extent and duration of the government restrictions being implemented across the different countries we operate in, the impact on our profitability for the year ahead cannot be reasonably estimated at this time. We continue to monitor the situation on closely, and we'll provide further updates when visibility improves and we have greater clarity regarding our financial -- expected financial performance in 2020. But looking beyond the crisis, I'm convinced that the longer-term prospects of CRH remain positive. Our financial strength -- our significant financial strength and resilience, combined with our portfolio of high-quality assets in attractive markets, leave us well positioned for the future recovery in our markets. And of course, as we have seen in prior economic downturns, construction tends to be one of the key beneficiaries of any future stimulus measures. So with that, I'm now going to hand you back to Q&A. I believe we have some questions on the line. [Operator Instructions] And now I'm going to hand you back to the moderator for the Q&A session of our call.

[Operator Instructions] First question comes in from the line of Robert Gardiner calling from Davy.

Robert Gardiner from Davy here. Two questions for me. One, I wonder, would you mind commenting on trading in April, kind of where you're seeing activity levels. And if you could give us a kind of sense of what's happening on the ground across your markets, how those markets operate. Any color there would be helpful. And two, maybe on pricing, just if you could touch on your pricing levels. Certainly, the like-for-like sales levels through Q1 suggests pricings held up very well. I'm just wondering how that's kind of trended as you've gone into Q2.

Thanks, Bob. Just let me take the second part of that question first with regard to pricing. It's an easy one to answer and it's a little bit shorter. I have to say I'm very pleased with the pricing performance in the first quarter of the year and indeed up to date both in North America and Europe. Solid pricing across our main markets in North America and in line with what we would have expected despite any slowdown we have seen in some of the markets in North America, not all markets, and price book. The pricing has held up across all markets in all products, and I'm quite pleased with that. I am particularly pleased, given the turmoil we've seen in Europe, that pricing has also held up very well. And that's good to see that discipline again for -- we are in the third or fourth year of the recovery, but it seems to be deeply embedded. Of course, we have a number of years of pricing to go to get back to what I would consider to be proper pricing levels for our main products in Europe, but pricing discipline holding up well across our 2 major markets. With regards to the current trading activity and how this pandemic is impacting upon our business, if I start in North America first. Probably the regions of the North America and the United States, in particular, I should say, that are being impacted are the coastal markets. So specifically in around the Northeast and around New Jersey, New York, up into New England, Connecticut, Vermont, places like that are impacted. And in the Pacific Northwest, particularly in Washington and states of Oregon and down into California. There are some other clusters in around Miami and Florida, New Orleans, Detroit, Chicago. But largely, our businesses tend to be outside of those areas. We're fortunate in that where our businesses are. But with the exception of the Northeast and Northwest, they are largely the central interior America business. And so broadly speaking, even though there have been shelter-in-place orders put in place in all 50 states, construction has been deemed to be an essential service. And therefore, and effectively in 49 of 50 states, it's carrying on, particularly horizontal construction. Residential and nonresidential construction is carrying on as normal in 38, 39 of the 50 states as well. I would say, at the current run rate, across the United States, we're probably operating at 85% of normalized levels because of the closure in the markets in the United States. Canada, which is a smaller market for us, is more impacted. Québec shutdown early in March, and that's effectively being shut -- mid-March has been shutdown since then. Ontario, less so, and Ontario is 2/3 of our business, by the way, in Canada. And that's effectively all horizontal construction has pretty much been open and going well. So we're probably operating across the United -- across North America in total probably about 85% -- 80%, 85% of normalized levels currently at the current time. If I go to Europe, we -- there's 2 stories. It's Western Europe and then Central and Eastern Europe. As I said -- as we said in our statement this morning, there's been a progressive slowdown and shutdown of business from about the middle of March. Obviously, as you would know, we have no business in Italy, so we weren't impacted by the terrible events there. But Spain went next, then France, then U.K. and Ireland and then Belgium. And they are the ones that have been progressively slowing down. And currently, they are operating -- U.K. is operating probably in about 40% of normalized levels. France and Spain probably at about 30%, 20% of normalized levels, and Ireland is about 20% of normalized levels. But I should say those 4 countries operate in total are -- they generate in total probably about 12% or 13% of group EBITDA, but are not that significant in terms of the impact on our business. If I move further east, Switzerland, Netherlands, Germany, Finland, the whole suite of business we have in Central and Eastern Europe, from Poland all the way down to the Balkans, continued good levels of activity. There hasn't been a huge impact there. Even though there has been some impact, operations there are probably operating at somewhere around 80%, 85% operating levels across those markets. So it's very variable, and it depends where you are. What we have seen over the course of the last, I would say there's been a change in tempo over the last 7 to 10 days. The conversations that we're having with the various construction, national construction industry federations are very much about how we go back to work. I think that in the industry that we're in, construction, we're fortunate in that it is an industry which is largely done in the open air. And whilst some parts of it, particularly vertical construction, is quite labor-intensive and you work inside in quite tight combined environments, most of the products we sell are for horizontal-type construction. It's in the open air. And actual physical distancing, social distancing is quite easy, and safe working practices are easier to embrace. And certainly, we're working with the authorities now towards moving back towards work -- back-to-work protocols. You can see that both in North America and in Europe, and the conversation is moving back towards that. And we can still the progress those conversations are taking place, and I would expect during the course of the coming weeks, I would expect by mid- to end of May that most of those markets will be back to work at some level of activity. But that will be -- we will refine that. But I think there's a keenness to get back to what in the markets we talked about. I think the protocols are being observed and looked at. And I think that the type of business we do, which is largely capital-intensive from CRH point of view producing building materials, it's done -- it's largely providing materials for horizontal-type construction. It's done in the open air. They're probably some of the easier areas to get back to work. But that's currently what we're seeing in our major markets at this moment in time.

The next question comes in from the line of Gregor Kuglitsch calling from UBS.

Can you hear me well?

Very well, Gregor.

Two questions, please. So firstly, if you could elaborate a little bit on the cost trends, particularly variable costs. So energy, obviously, being the topic, oil price, bitumen, if you could just give us a bit of a sense where kind of unit costs are trending perhaps in the U.S. and Europe, just sort of a picture that would be helpful. And then secondly, if you could just flesh out a little bit more on the cash generation and liquidity side. If you could just help us understand, obviously, in a scenario where earnings come down, how you can protect free cash flow generation. Obviously, you've talked about some of the levers, CapEx and so on, but if you just could perhaps, wherever you can put, some numbers around where you can mitigate some of the earnings impact. Because I think if I look back in time, back in '08/'09, the group generated quite a lot of cash flow, which I think is important. So if you could just give us a little bit more detail would be helpful.

Gregor, I might start then with that in terms of cash generation first, then I'll come back to the energy trend second. In terms of the cash generation, a couple of things to say. I mean, first of all, we come into this crisis with a very strong balance sheet. As you know, at the end of last year, we had net debt to EBITDA at 1.7x. And as where we -- and also, as you saw at the beginning of the year, we obviously started into the year with EUR 3.5 billion of cash on the balance sheet, so on deposits at that point in time. Since then, obviously, as you've seen in the announcement this morning, we drew down on our revolving credit facility, which is a further EUR 3.5 billion. And as of today, even taking into account the seasonal investments that you would make in the beginning half of the year in terms of working capital and CapEx and also the first EUR 200 million of buybacks that Albert mentioned in the first part of the year, we still find ourselves today in a position where we've got over $6 billion of cash on deposits at this point in time. So we're starting in with a healthy cash position. Obviously, then the real focus is on -- is making sure that we mind and we preserve and look after that cash as we look through the first number of months, but also looking out to the second half of the year. And there's a number of actions that we've taken. As we've highlighted today, we're very focused on making sure that all discretionary expenditure has been paused. Anything that's not essential is not being incurred. To take one example of that, CapEx is a good one, but you will have seen the way we behaved in the last crisis and the way we intend to behave in this crisis. From a CapEx perspective, you know that about 50% to 60% of our spend in any year is on maintenance and the rest is on usually expansionary-type activity. So it won't surprise you that we've been active on the CapEx already and that we will be looking to pull our CapEx numbers this year back to, again, somewhere in the region of about 60% depreciation, so somewhere close to the maintenance CapEx as required. Likewise, on the working capital side, we get very focused on working capital and obviously paying a lot of attention to our inventory levels, paying a lot of attention to our receivables in the current environment. And again, we are, I would say, are in full-on mode to make sure that we're watching those 2 measures, making sure that we're not building up any excess inventory and we're taking account of some of the shutdown activities that are going on in their business, and also making sure that we're paying close attention to our customers and working with them to make sure that we're managing our receivables. So those are areas that are big -- a big focus area. We've talked on as well about, obviously, reducing our cost base in terms of the opportunity to restructure businesses, but also to have temporary layoffs where we have seen production activities shut down. So all of these are all about preserving cash. But I would say, if you look at our balance sheet, one other comment I'd make is if I look at the health of the balance sheet this year versus last year, we're comfortable that when we get to the half year this year, that our net debt levels will be well below what they were at the half year last year. We obviously traded very strong in '19, and we had a very strong end to the year in terms of cash generation, which obviously is reflected in the balance sheet position at the end of the year. So I think that's really how we feel about the strength of the balance sheet, the strength of our liquidity position. And obviously, while we're on that topic, we have engaged with our rating agencies as well over the last number of weeks. And again, we're -- I think we're in a very positive place with the rating agencies, and they continue to affirm our BBB+ rating at this stage. Coming back to energy and cost trends. I think if you look at it in terms of the main items that you probably are referring to is really what's happening in terms of energy costs. In the first quarter of the year, across the group, on average, you see our energy costs are down about 9%, 10% across the group, so in first quarter of our performance. The big feature we watch, obviously, is looking at what's happening in terms of oil price, and in turn, what that means for us in terms of our bitumen activities, our asphalt activities. So you can see oil prices down a lot at this point in time. At this stage, today, bitumen prices are not yet tracking that decrease in oil. But were they to track that, then, obviously, that's something that we've talked about in previous calls where we will look to pass it on to customer. But as we pass it on to customer, in a declining price environment, obviously, there's a benefit to us in our margins as we will look to hold on to some of that cost reduction into the second half of the year. And I think probably more longer term, if you look at -- if we do live in a lower oil price environment and we do live in a lower bitumen cost environment, then that means for some of our customers who are spending fixed quantities of dollars every year, it means that they can get more volume done for the same price. So I think they're the main trends we're seeing in the business at this point in time.

The next question comes in from the line of Arnaud Lehmann calling from Bank of America.

A couple of questions for me, please. Firstly, maybe a general question. When you look at this crisis, how do you think it compares with 2008 and 2009? And generally, how you think you are positioned for it relative to 10 years ago? That's my first question. Secondly, back on capital allocation, is M&A activity completely frozen at this stage? Or could you see in the coming months maybe some small, mid-sized acquisition opportunities maybe from some of the smaller players in the industry?

I think it's quite different to 2008 what we're seeing here. The unprecedented speed of the collapse of markets by the shutdown of those markets is very different to what we saw in 2008, and hence, our response is going to have to be different. However, there are certain things that are the same. We operate in a cyclical industry. I don't know whether this is my fifth or sixth recession. However, whatever it is, it is. But I think CRH and the industry is starting from a very different place. If you go back to 2008, there were bubbles all over the place in terms of construction. We had overbuilt, and we clearly had -- we would have a hangover from that. There are no bubbles here. This has been caused by an external event, so it's very different in terms of its nature. And also CRH, by the way, is also a very different business than we were back in 2008. We're a much narrower business, a much more focused business, much leaner business. I also think, and I think it really matters at this stage is the gray hair that is on my head and at the head of my executive colleagues, experience matters. Knowing what to do in these times and knowing how to manage significant downturns and having been here before, I would note it’s very interesting how myself or my executive colleagues, within 24 hours, moved into action mode on this when it became clear what the issue was. I think also our financial strength of CRH is very different to what was in 2008. Senan has very well set out for you the strength of our balance sheet and the cash-generation capability of our business. And I think that stands to us as well. And I think another thing that's different is the fact that our geographic footprint, we're a much more focused business in -- across Europe and the United States. And if I look at some of the deals that we've done and the portfolio of work that we've done over the last few years that helps us, the addition of the Ash Grove business to our Materials business in North America means we're much more focused on the central part of the United States, which, of course, is the area that's protected most from this terrible crisis, the terrible virus. The addition of the business we bought as part of LafargeHolcim in 2014 and 2015 in Central and Eastern Europe on the Heavyside businesses, again, the parts that are being sustained and held up more, those strong Materials businesses there, which will continue to benefit from the stimulus packages that they currently benefit from the European Union, it continues to be strong. And of course, a simpler business because we don't have the big distribution arms that we have in the past, which would have been, I think, impacted by this. I think also, quite importantly, is that our work is very much focused on all the positive things that we're doing. We had a lot of cleanup to do at the end of the last financial crisis. And we spent maybe 2, 2.5 years doing very significant portfolio work, decide what we wanted to keep and reshape the business. In doing so, we had ended up, as I said, to what they -- a leaner business, a more focused business, focused on 2 parts of the world, North America and Europe, which we think will benefit from stimulus packages because, quite frankly, the governments of those part of the world can do so, they have the financial capability to do that. And I think also with the focused end markets that we're in, we have very heavy exposure to government-funded projects, particularly in North America, but also in Central and Eastern Europe. And that, combined with the financial strength of our business, I think will lead us to weather this storm, particularly well and come out into the dealer side of the recovery and continue on to grow organically, but also inorganically, which leads me to your second point. During the course of the last crisis, I remember sitting as Myles Lee, the Chief Executive at the time, as his right hand, as he guided us very skillfully and perfectly through the 2008 to 2013 crisis. And during that time, we invested over EUR 6 billion in M&A and capital expenditure during those 5 years, about EUR 3 billion in each area. And I know our industry very well. And during that time, we saw that people looked ahead, and saw 4 or 5 tough years ahead. And we have conversations with many people in our industry about opportunities to buy their businesses that go on for decades. And when we find that what will happen is an issue like this will crystallize in their mind the decision that they want to align themselves more. And we'll find more and more people, particularly the bolt-ons, particularly the mom and pops, which are the bread and butter of CRH, they will come to us. And the value of opportunities that are there really would be too good for us to turn down, particularly if we have got the financial strength that we have, which we have going forward. Look, I expect CRH to be careful and prudent as we always are. I don't think this is the time for any large-scale M&A. But when you see some strong, value-accretive additions to your portfolio of businesses, I would expect us to capitalize on those. And I would expect it to continue on at the same vein as we did during the course of the last crisis. So selective M&A in a prudent way. Discipline is always within CRH. Positioning ourselves, not just to deal with this day-to-day crisis we have now. But our mind is very much focused on the recovery, the shape and speed of that recovery and making sure that we can benefit from that recovery when it comes, not just from organic growth being in our market positions, but also the benefit of some of our inorganic growth as well.

The next question comes in from the line of Paul Roger calling from Exane.

Just a couple of questions from me, most of them answered. So first of all, you referenced the U.S. backlog situation. And I think you said they continue to be quite good. Is it possible to put any numbers on that, just to sort of help us understand the sort of pent-up potential and what sort of demand we could see when the restrictions are lifted? And then secondly, also on the U.S., you've made some comments by region, but I wonder if you can say a bit more by end market. And specifically, whether you're seeing any concerning signs in the nonresidential sector.

Okay. Paul, 2 questions there. I'll take both and just see if they're related to some extent. With regard to U.S. backlogs, at this stage, probably ahead by about 2% to 3% actually. And actually, even before backlogs, this bidding season -- so bidding turns into backlog when we win bids, and the bidding season is also a good indication of what -- the backlogs turn into business and the bids turn into backlog, if I put it that way to you. The bidding season is very strong. In fact, what we're getting from a lot of the states is clarification that they have surety of supply. I think at this time, the states realize it's important to keep their economies moving. Construction is one of those areas that can go, and they want to make sure that we can continue to supply their markets. By the way, that's not just in the United States, that's in all markets in the United Kingdom as well, by the way. So I think the backlog is ahead by about 3%, broadly speaking, but even stronger indication on the bidding side as we go forward. So that would give us a look forward to probably about 12, 16 weeks ahead. So we will be bidding work now for sort of July, August kind of work. So that looks particularly strong. And with regards to the individual end markets, well, I'll just answer the question there for public infrastructure there by telling you that in terms of what the outlook for that market looks, it looks good in terms of going forward. With regard to res and non-res, some trends out there, some commentary out there with regards to non-res, which can look very black. I saw the ABI overnight there. And broadly speaking, actually, I think the non-res construction, it's hard to look through it because you find in areas where there's a shutdown in vertical construction, it's obviously very impacted. In areas where there's no shutdown on vertical construction, it's not as much impacted. Some good strong growth in particular areas in data centers, warehousing, in particular, particularly in the western part of the United States. So it's a little unclear to draw any long-term trends on that GS. I'd watch it carefully though. At residential, the way residential goes, you really won't know where residential is until about 3 to 6 months. But what will happen is, I mean, there's projects that are ongoing at the moment. All developers will finish out the work that they're doing. There's no point in leaving a housing scene active. They must be finished and completed for then they can convert them into cash. So no matter what happens, the banks, whoever may be, they will continue to finance the developers doing that. I think we'd have to watch and see what the next phase is like to see -- to get a longer-term trend. Other than to say that we didn't recover back to one of the long-term housing demand levels. We're still at level point even though it started off -- ended the year quite well last year. Interest rates continue to be very low. But it's a question of exactly how we start to get through this next phase and how the U.S. economy starts to reassert some confidence in itself I think will determine particularly the residential sector. So I don't think you'll see clarity in the residential position until they finish out the current works that are underway, and that will usually unwind over the next 2, 3, 4, 5 months. And then with regard to non-res, it's tough in the places that are shut down, but then that's because they stopped all vertical construction. But in the places where it's not shut down, it's broadly coming on reasonably well, yes.

That's great. Just one very quick supplementary. I see U.S. aggregate prices were up 1% year-to-date. That's a little bit shy of maybe what the industry was talking about. Is there anything specific going on there?

No, no. That's just mix. It's early season mix. If we -- it's just -- if you look at early season, volumes are very low. And if you have a slightly higher percentage of low-grade fill, it looks very low. But as the year unwinds and you start to get a more normalized mix and balance through your businesses, I expect some deterioration of 3% to 4% in the course of this year.

Okay. So the final question comes in from the line of Elodie Rall calling from JPMorgan.

So maybe if you could, first of all, quantify a little bit on the impact that you've seen on EBITDA. Q1 sales up 3% like-for-like. We have in early a cost tailwind. Is it fair to assume that the EBITDA went up over-proportionally than versus sales? And thinking about operating rates in general, you've talked in the past about ARPU of around 20%, especially in the last crisis. Is this still a fair solution to have in mind? Or should we think about something even lower given the cost actions that you have taken already? And lastly, on CapEx, I mean, you're talking about reducing CapEx, obviously, could we have a little bit of an idea what the maintenance minimum would be, like if you could quantify a bit versus the $1.4 billion spent in '19?

All right. Elodie, I'll have to go with those questions. In terms of the first one, about EBITDA, in terms of Q1, yes, as you pointed out in the results this morning, obviously, our first quarter sales are ahead on a like-for-like basis, 3% over last year. Basically, we don't disclose Q1 EBITDA within that. But you can rest assure that the EBITDA performance was better than 3% like-for-like, so that there was positive leverage in that performance in the first quarter. Basically, first quarter, as you know, is a small quarter anyway, so it's not that significant. And we've obviously moved downwards, moved down since then. In terms of leverage, I think your overall comment, we guide, as you said, to a 20% leverage scenario in the long term. When you look at it that way, I would still hold that type of number in terms of the performance. And I think specifically on your CapEx then, yes, as I said, our ambitions and the actions we've taken are about taking our CapEx numbers back down to somewhere in the range of about 60% of our depreciation. And as you point out, looking at our performance last year, pre the lease accounting activity, we would have been at about $1.3 billion. And then obviously, we're talking about taking that number down to somewhere in the region about 60% of that in the current year. And there's obviously some lease costs as well, but they'll likewise come down from last year.

Okay. Thanks, Elodie. Look, I think that's all we have time for this morning. I just want to thank you all for your attention. And as always, if you have any follow-up questions, please feel free to get in touch with our Investor Relations team. We look forward to talking to you again on the 20th of August when we look at our interim results for the first 6 months of 2020. All of you just mind yourself and stay safe, and we'll talk to you then. Thank you very much for your time today.

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