Dätwyler Holding AG (DAE) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Dätwyler Conference Call and Live Webcast. I'm Andre, the Chorus Call operator. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Dirk Lambrecht, CEO. Please go ahead, sir.

Yes. Thank you very much. Welcome to our today's call. My name is Dirk Lambrecht and I'm sitting here together with Walter Scherz, our CFO. First of all, thank you very much that you have, let me say, joining here our call with such a short notice, and we are very pleased that so many people are here with us. And we are very pleased to explain in person our strategic rationale for the planned acquisition of the company, QSR during this call. Let us start with an introduction to the company of QSR. Already by looking at the pictures from QSR, you will notice that there are many similarities to Dätwyler. QSR is a leading supplier of high-quality seals and components for industrial electrical connectors made of silicone. In 2021, QSR achieved sales of USD 164 million at 5 plants in the U.S., Mexico and China, QSR employs 1,250 associates. QSR already founded in 1966 and has a really strong track record. The company holds high market shares, generate strong profitable growth and really emitted to be accretive to our business. QSR features and identical business models, similar competencies, system-critical components and complementary markets. QSR's distinctive competencies include leading material expertise and engineering capabilities and in-house mold shop and mixing facilities and sophisticated testing analysis lab and a highly automated production. All these competencies are very similar to Dätwyler's core competencies. QSR's main product group is system critical seals and components for electrical connectors. The offer includes grommets, overmolds with 2 components, ring seals and cable seals. With this product group, QSR achieves some 80% of its sales. The remaining 20% of sales come from ignition insulators. QSR holds leading market positions in several end markets such as mobility, industrial, consumer, lightning and solar. With around 60% of its sales, light vehicle is the largest and most important market. QSR estimates that more than half of electrical connectors in current U.S. electric vehicle models have QSR seals. Here, you'll see the 5 QSR plants in the U.S.A., Mexico and China. Because of this setup, QSR going to rate some 90% of sales in North America and Asia. This has really 2 positive implications for us for the future. The planned acquisition of QSR by Dätwyler will accelerate the development of a more geographically balanced portfolio for both companies. And Dätwyler's strong presence and established sales network in Europe represents a major opportunity to increase QSR product sales in Europe. QSR serves the end market, as described before, through supplying its seals and components to the world's largest connector technologies companies. QSR has long-standing and close relationship with these globally active customers and is frequently the leading supplier. QSR has been supplying some of its customers for more than 30 years without any interruptions. One of the main reasons why we plan to acquire QSR is a very attractive growth potential. The company will enjoy in the coming years. Independent market research forecasts a 9% annual growth rate in the coming years for electrical connector seals, ECS. The drivers of this growth are megatrends such as Internet of Things with connectivity of devices, Industry 4.0 boosting automation, transition to electrified vehicles, autonomous driving and many others. Today's electrified cars, for an example, contain 250 or more electrical connectors. The majority of these connectors contain a silicone elastomer seal for a reliable lifetime functionality. Electric connectors are already used in many industries. In the future, more industries will start to apply electric connectors. And at the same time, the number of electrical connectors used will increase in most industries. Additionally, the harsh environment in which the electrical connectors are used will increase the demand for system-critical seals and components to protect the connectors. Electrical connector seals safeguard connectivity in harsh environments, prevent severe consequences from connection failures. And at the same time, they only contribute a small portion to the system cost. This is another important similarity to our products of Dätwyler. The beauty of the planned acquisition of QSR is a attractive growth potential, combined with the [indiscernible] in terms of strategy, core competencies, culture and geographic presence. As described, the markets served are underpinned by relevant megatrends. We see attractive gross selling opportunities for our 2 existing business units, Mobility and General Industry. Just as Dätwyler, QSR offer system-critical components for high-demanding application and relies on distinctive core competencies, especially and that is very important of material expertise with silicone rubber. Thanks to its leading market position and the long-standing and close relationship with the global connector technology companies, QSR has achieved profitable growth for many years. With the acquisition of QSR, we will combine 2 complementary companies with a common strategy and significantly accelerate Dätwyler's transition to electrified mobility. Together, the 2 companies can open new product segments and sales markets for each other. Our CFO, Walter Scherz, will now provide some additional information on the transaction. Walter, please proceed.

Thank you very much. Hello, everybody. A warm welcome also from my side. In our due diligence, we have carefully analyzed the potential of QSR and the growth trends of the sales markets with the support of external specialists. We actually came to the conclusion that QSR has a strong track record of profitable growth and is well positioned to benefit from attractive future growth opportunities in its markets. Since 2012, QSR has grown with an above market average annual rate of 9%. Also in the challenging years 2019 and 2020, you remember those years, I'm pretty sure, QSR managed to outperform develop relevant markets. The downturn in the pandemic year 2020 was lower than the markets and the 30% recovery in '21 was significantly above the market. As you have seen in the press release, in 2021, QSR generated sales of USD 164 million and an adjusted EBITDA of USD 44 million. Both figures are significantly above pre-pandemic levels. Based on our analysis, we are convinced that the relevant markets will grow at an annual rate of 9% in the coming years. The attractive -- or this attractive business case of QSR leads to an enterprise value of USD 625 million. To finance this acquisition, we will use existing decreasing reserves and third-party sources. Here on that slide, you see our proven organizational structure to provide system critical components to attractive global markets. During the past 2 years of pandemic and supply chain challenges, the increased market focus of our organization has proven itself. To leverage that promising potential of QSR, we will integrate the new company as an independent business unit in the Industrial Solutions business areas. Here you see that on the upper right of the business unit Industrial Solutions. While driving the QSR business in its current markets, we will foster the cross-selling with the existing Mobility and General Industry business units. As with all our business units, QSR, will benefit from the services of our group function, technology and innovation on one side and finance and shared services on the other side. Let me summarize what has been said already in a short slide here. QSR market position, QSR is a leading global supplier of system-critical electrical connector seals. They have unique competencies and materials, engineering, tooling and production. They have a close relationship with the world's largest connector manufacturers. And last but not least, a broad portfolio of complex seals and components. The overall market growth, which you see in the middle is expected at an average annual rate of 9% for the coming years. When we talk about strategic priorities, we won't penetrate the existing markets. We will be boosting sales in Europe with strong Dätwyler with the strong Dätwyler sales network. We'll have leverage or will leverage cross-selling with Dätwyler business unit's Mobility and General Industry and in the end, open up new market segments. With that summary, I would like to hand over to Dirk.

Thank you very much, Walter. Yes, I would like to conclude our presentation, and let me summarize the 5 elements of our investment proposition. And you will see that we'll also perfectly apply to QSR. So we focus on system-critical elastomer components. We offer superior customer value based on our recognized core competencies. We have leading positions in markets driven by megatrends. We are dedicated to talent development and sustainable growth and we have a track record of strong performance and financial stability. I'm convinced that with the acquisition of QSR, we will further strengthen our foundation and accelerate our profitable growth. Yes, with that, I would like to thank for your attention. And now Walter and myself are happy to answer any questions now and please, now the line is open, and we already see some questions coming.

The first question comes from the line of Michael Inauen from Stifel.

I have a couple of -- I have a couple of questions. I tried to group them in 2 areas maybe on the business in general. Can you -- and I'll just ask them and you can, of course, answer afterwards. But can you just tell us how much of the automotive revenues are still combustion driven and not EV? And who is actually the client, so to whom do you sell to the connector producers or, for example, to the Tier 1 supplier in automotive? So that would be just on the business. And on the numbers quickly, I saw that you were referring to adjusted EBITDA numbers at QSRs. I was wondering what's the adjustments and what's the unadjusted number? And on the margin, also what's the potential there? I mean it's really high, almost 27% EBITDA margin. Is there still potential, thanks to the shared services that, that Dätwyler also offers now with technology innovation, finance and so on? Or is that if I want to be provocative, I would say, is the company underinvested and has just -- everything has been squeezed out in the last year? Or how can we maybe look at that? That's just for the number of parts.

Okay, Michael, but there's a lot of questions on why we need one-off. No, I think first of all, the customer -- we have -- further off, we have to remember, we have just the signing and not the closing, yes. So first of all, I think the customer portfolio, what we have here, especially for this major part of this business, what we are looking for is customers like Amphenol, [ TE ] Molex, such customers. So that means, which are producing such connectors. And of course, they are using as well other distributors to bring their products to the market. It depends on the market, yes. And for the insulators as you asked for, I think there we have as well customers like Bosch. That is the only customers for such type of insulators where we have some overlapping. So that means we as well at Dätwyler, we are producing such elements, products in our portfolio, for example, in Brazil or in Germany. So there will be some opportunities in the future to bring such, let me say, product portfolio together. I think that is -- that will be around 10% to 20% of the total turnover. When it comes to the share, again, let me make very sure with the light vehicle, I think that is -- it's around 50%. But even from time to time, it's not so easy to identify where the products are going in because as I mentioned, that this customers, not always saying exactly where their products are going in. But that is the best guess what we figured out in the data, which was provided to us. And with the rationale of what we have with several companies, we work with several companies to evaluate what would be the market growth in the future, not only with one. So we have 3 independent opinions, where we came together and what is the growth rate for the near future. And the other one is the ICT, I think it's quite important to understand, which is around 25% to 30% of this business. That is the direction of industrial, commercial and transportation that is not light vehicle, yes. And then we have other applications like in the Marine or Aerospace and so on. I think there's a wide field. And even I have to say what is the churn for the future as well future white space, which is not covered today, which we would like to go deeper in, but it's too early to give you more information. But I think that when we are having the closing then, of course, we will, together with the people we can look deeper into applications for the future. Yes, I think Walter, would you like to move forward with some information on the...

Yes, exactly. You basically asked to Michael, just to recap for which costs was the EBITDA adjusted. Here, we can say the majority of the adjusted costs, not all, but the majority are one-off costs incurred by transferring products from the U.S. plants to the plants in Mexico and China. About the details, we do not disclose the details about this, certainly not until closing. Those are the '21 figures as you rightly said, when we talk about '22 is there kind of what will the margins look like. Keep in mind, there will be onetime cost from the acquisition, and also further product shifts. So there will be an adjusted figure in '22 as well. And then -- I mean, that's an accounting gimmick, right. But in the end of the day, you also need to adjust for the fair values, examples, inventory when you talk about the acquisition opening balance sheet. But from the years to come, afterwards, our goal is to reach the current values with the reported EBITDA margin of the QSR business. I hope that answers at least part of your question. And with that, I would hand over back to Dirk for the third -- wonderful, so let's move on.

But Michael, I think there will be further challenges -- opportunities in the future to go more on the details -- that is the first glance about different markets and what we expect here.

If I understood it correctly, so you don't know exactly what goes into combustion and EV. Is that correct? In the light vehicle. You don't know what is actually...

We are knowing the range. We expect in the light vehicle vector, as I said, is 50% to 60%. And the majority as I said in my presentation, a typical battery electric vehicle has over 250 connectors in such a car. And of course, that is a multiple of that, what is in the standard car, beyond and hybrid cars. And that is why what we look for. I think this -- let me say, this company is as well serving -- maybe not mention the name, but the most successful companies in the world when it comes to battery electric vehicles, okay?

The next question comes from the line of Christian Obst from Baader Bank.

The first one is, can you give us an idea how much is a goodwill from the price you are paying for this kind of acquisition? Then I have a second one, it goes to some kind of personnel costs. What do you expect here? So there is the split between the U.S.A. and in Asia. And when it comes to sales per employee, it's close to the figure you achieved in your industrial business. But when it comes to EBIT per employee, it's approximately your average. So double the figure you reach in your industrial business. Is there some kind of a risk that was increasing personnel costs that this margin might decline? And another question is, why is the QSR business so much more profitable than your industrial business? Can you give us an explanation here?

Hello, Christian. This is Walter. Well, an idea on goodwill. You are aware, yes, there is an idea, let me say, a range [ 452 to 480 ]. However, that will actually depend on the closing figures, right? And we know that it's moving target at the moment. But this will be approximately a range. When it comes to increasing personnel costs, we don't see that actually. I don't know what you are referring to, you basically say, well, I did not necessarily get that question. You say, well, if there is increasing personnel cost sale, margins will go down. Yes, I can confirm. That would be the case, but we don't see why personnel costs would go up.

Okay. So it's already starting in the U.S. and in Asia that we see an acceleration of personnel costs throughout many industries. If you are not affected, fine, but -- okay, I take it as that.

Christian, maybe, can I add something to that, just to help here because that is something which is part of every company currently in the market. So the inflation is quite high. And of course, and therefore, you have to bring this cost through to the customers. You cannot cover that via productivity. And that is the reason why they ask what went through price increases over the time and bring it to the customers. And that it's similar to what we have that you have, let me say, some lacking effects with that. But what I understood so far they were quite successful with covering the prices from this perspective. And that is what we are doing with our business here as well. So when you asked another question, and that was with regard to our margin in Industrial Solutions, why they are having a higher margin. Yes, that is a good question. I assume that is here, let me say, the product portfolio, they are very focused. And we have to see there, meanwhile, have relocated most of their products quite successfully to China and to Mexico. So that means their personnel costs related to the turnover is on a good level. And we still have a couple of facilities, which are serving the European market with all the difficulties which we have seen in the last 2 years. So there, let me say, we will dive deeper into that topic. But what we see today makes them quite confident that they have a very strong position there.

Okay. Two additional questions, if I may. First, can you give us an indication why they have sold such a profitable and fast-growing business?

No, that is in private equity hand and no, that was still since 8 years. And typically, such periods are a bit below that. But if you would like to have the direct answer, maybe you should ask [ 3E ].

In the end, this leads to another question. Of course, private equity is selling when they say, okay, my cash flow profile might deteriorate a little bit. So can you give us some kind of CapEx idea, which you need for QSR going forward? And this is the last question.

Thanks a lot. I'll take over Christian. When you talk about CapEx, I think -- or we believe that QSR is actually appropriately CapEx. Obviously, there are a few opportunities which we see going forward. When we talk about our guidance for the CapEx that we gave that will be certainly -- that will be certainly within the guidance that we gave. So there will be no addition in this moment in time. What will become a kind of investment is certainly the IT environment where we believe that we want to have the Dätwyler standard. So this is certainly an investment that will come. Other than that, we are quite confident that we will cover that in a normal course of the guidance of our CapEx.

Finally, we do not see currently that is an underinvested company. I think from that perspective, we were quite happy to see that.

The next question comes from the line of Richard Frei from ZKB.

Just probably also looking quickly back to the history of QSR, so do you know a bit what the reason was that they ended up at private equity. And additionally, I guess you have a bit of an idea how healthy the balance sheet looks like. So may you just provide us some flavor on this? And then last but not least, enterprise value of CHF 625 million seems to be a bit of a moving target. So are there discussions regarding earnouts, what can we might expect regarding ups and downs of the prices probably also affecting then the goodwill of CHF 450 million to CHF 480 million you have just mentioned?

Yes. Let me start with your first question why the company finally end up in private equity to that time that was as well before I remember other companies in place even we had a look to this company in 2014. So that is not the first time that we are looking for this company to that time that was a [ Q Holding ] which has a couple of different, let me say, products and markets in the portfolio. Honestly, why that finally and to -- I can't tell you exactly, but I assume that gave the best price to that time.

Thank you very much for the all the 2 questions, Richard. Does QSR have a healthy balance sheet? Yes, we think so. We did conscious, very deep kind of due diligence, and we think it's in a good concession. And obviously, the seller, 3i, they are a very reputable company. So we also think that from that perspective, they don't provide a company with not a healthy balance sheet. So we are quite happy with that. The last question about the goodwill or how do the closing price mechanisms look like? I'm not allowed to disclose all the details, Richard. However, you can, you can assume that the normal closing price mechanism that you would see like net working capital adjustment stuff like that, that is there as well. And obviously, the next month, we'll actually define how the kind of -- how that target moves and how it will be in the end of the day kind of finalized.

Okay. And if I may, an additional question on the financing of the transaction. So besides the cash you have at end, you've mentioned like third-party loans. Can you give us some more insights there? Or is that also not to be disclosed?

No. That's -- I mean, I cannot give you much more, right? But at the end of the day, we said it's the liquidity reserves, which we have on our balance sheet and the kind of a bridge financing. So there will be a bridge financing by kind of a reputable partner, reputable partners that we have. And after the bridge financing, as you know, there will be a takeout period, and this is obviously something that we start working on right now, and we'll have a clear picture with the closing.

The next question comes fom the line of Daniel Koenig from Mirabaud.

Two, three questions. First, I was wondering, are there any synergies in terms of cost with QSR? And then I was wondering you were rather relaxed in terms of salary inflation. Can you tell me how many of the employees are actually working in the U.S. because I'm kind of surprised. A week ago, [indiscernible] electrician mentioned that they were worried about the plant in North Carolina, and you are rather relaxed. Can you tell me how many employees actually work in the U.S. because there seems to be a slight there?

Let us start with that. I think that we have around 350 persons working in the U.S. And by the way, maybe you got the feeling, but I'm not relaxed with the price increases, honestly. That is quite a challenging situation, I think to all companies, meanwhile. But what I said, as long as you have a product portfolio in which we have a clear position in the market, and you have enough, let me say, power and strict management, you have to pass through such cost increases to the customers. Today, there is no other way. So there will be price rounds to cover that as best as possible. And we not only have the personnel costs, we have as with raw material prices, energy and so. Coming to that. I think that is -- maybe that was a wrong impression, but I'm not relaxed, but I think we can manage them.

Not hyper nervous.

Yes. I'm never getting nervous. So when it comes to the synergies, there are synergies, we see really some good synergies, but which we have identified. We have that in the business plan, we will not disclose it today in the days because we would like to have, first of all, have further discussions with the people after the closing, just to confirm that what our assumptions are as that going in the right direction. So there will be synergies coming on one hand, mainly in the area of, as we said in one of our presentation, cross-selling activities, yes, I'll give you just one example. We are meanwhile, big producer of O-rings. And they -- their customer space needs as for such type of path. But today, they were not able to offer that. So in the future, for example, that could be one of the big opportunities. And then we have other samples of products. And when it comes to the production portfolio, of course, we will think about how we can better leverage our facilities in the different regions and how we can bring the right product portfolios together. I think that is something what we will analyze more in the detail when we have the better access to the people, but from the -- we have a plan for that. Let me say that in this way, and we can tell you more after that with the half year results.

The next question comes from the line of Sebastian Vogel from UBS.

I got three questions. The first one is more on Dätwyler specific. What sort of minimum cash you need to run or you need to have to run your operations at Dätwyler? That would be the first question. The second one would be, if you can give us a bit of a rough indication of how the margin profile of QSR was looking before the years of 2022? I don't mean that you need to give us exact numbers, but that you have a bit of a better feeling how much volatility we can see in this -- in the margin profile. And the last one would be, can you help us understand a little bit more the D&A intensity of the business of QSR? That would be great.

Would you like to start with the cash, Walter?

Well, I'll start with the minimum cash situation. I think for your modeling, you can't just take the figures that we have at year-end '21. You need to take into account that we also, in the meantime, closed the acquisition of Yantai Xinhui, which we actually also paid during that time, and there was also a dividend payment. So you need to take that into account when you want to calculate how the leverage will look like. With that, I would hand over to Dirk for the margin profile before those...

Yes, thank you very much. I think what we can see -- and due to the growth, there was two effects, which has driven their margins in a positive way. The one thing is the volume that over the time, they were able to grow significantly year-by-year. There was in the last 10 years, only 1 year where they were below the market average. All other years they were able to beat the market in the different markets in which they are in. And the second factor is for the increase over the years, which we have analyzed, of course, quite indeed, if you can imagine, that is linked to the shift of the portfolio for the -- from the U.S. facility for example to Mexico or to China. So meanwhile, the biggest portion of the sales is coming from such countries where typically the personnel costs are lower. So their product technology allows to use, let me say, quite a good leverage in such regions with people. And I think that is the biggest impact to the increase of the margin over the last years. Continuously, that is not just a drop in, sorry, in the last year. So that is continuously visible what happens here. I hope that helps. And maybe Sebastian, I haven't understood the last question. Can you please repeat it?

Sure. The D&A intensity. So how much depreciation on a sort of potential sales or so number we should normally think about for this business?

So I'll take over again, we would say something between 4% to 6% something like that. That's the region where we are looking and aiming at.

Got it. One follow-up question, if I may. That would be on integration costs. Can you give us there also a bit of a rough indication? And what sort of ballpark we should be looking at and over what time or what sort of time frame we should think about it?

Yes. We will not disclose the integration costs so far. We have identified, we are looking to a very fast integration as that you have seen in our organization chart, we will keep them as a business -- as a separate business unit, which I think is quite important. So I would like to make clear that it's not in a restructuring case. So what we have to do, first of all, we have to make sure that they can stay to the speed what they have delivered to the market. I think that is quite impressive to see. And even maybe in some of the areas we can learn how we can do that with other business. I think it's quite, quite important to see that here. From that perspective, we have some integration costs, but I think that it will be not so high and let us have the closing, and then let us go a little bit deeper into the details so that we can give you more information of what it would look like when we have the half year result or the latest by the year-end.

That's good. So if I may just squeeze in one very last tiny follow-up question. With regard to the sales growth profile that you're outlining before, and I assume that was all organic, right?

Yes. Correct.

We have a follow-up question from Christian Obst from Badder Bank.

One additional follow-up concerning management attention in the end. So to be honest, I thought managing the Chinese acquisition, the new plant in India, the ramp-up of the capsule production in Switzerland, there is a lot to do to manage growth. And of course, this is a growth story, and I agree that this will be a growth story, but also growth has to be managed. And then you add before everything is really working very smoothly, you add another thing. Do you think you can run into some kind of management shortage or something like that? Or you have to add some management capacity?

No, it's not needed. I think we have to -- now that was a short question. The point is here that we have with QSR, an experience management, even this management a part of this second layer especially, is more than 15, 16 years already with the company. So even by far before we bought them. So that is a very experienced team. I spoke with all of them. I have a really good feeling that they are able to manage this business in the right way. And the other topics what you have mentioned is mainly linked to health care solutions. So there, we have more or less a separate business area, which is led by Dirk Borghs, as you know. And he is responsible for the integration of the Yantai. So we have different people with different topics here. And when it comes to the food and beverage sector, what you mentioned that, of course, that is as well as the CEO for Industrial Solutions, I think we are coming with our investments closer to the end for the next years, I don't think that there will be huge additional investments to provide the sales for this sector. So from that perspective, I think -- and I believe that we can manage that in a good way without losing focus to the most important things on 1 hand of the market. On the other hand, to have a strict cost control, I think, which is quite important to stay focused. I think we have a good team.

We now have a follow-up from Daniel Koenig from Mirabaud.

I have two questions. Have you [indiscernible] how the business was working in a classic recession? Because we have now in the U.S. an inverted yield curve, which would suggest the recession is coming. Have you look how QSR was performing in a classic recession? And I was wondering also at your market growth assumptions, it's 9% [ covered ]. Isn't that maybe a little bit the underlying as macro assumptions are maybe a little bit too high? That's it.

Yes. Thank you very much. Let me start with the last one. As I said, we worked with 3 different companies together to have a deep understanding of the market growth for the future. And I just can tell you that this company was independent of each other. And finally, we came out with this growth rate, what we have explained today. So from that perspective, it seems quite reasonable that this market growth will happen. Secondly, that was with the linked to the crisis situation. I think when we are maybe taking in consideration, I'm not sure if you -- the year 2008 and '09 -- '18 and '19, sorry, where we have seen the first drop in the automotive sector, and as I told you, they were able to perform better than the market. And one of the reasons is, especially their focus, and we are looking here, let me say, for this special portion of the light vehicle market, that even if we would see in the crisis in the automotive series that we currently experience here in Europe for an example, that here, the penetration of electrified vehicles will, let me say, flatten this effect over the next year. I would say in the next 6 to 8 years, I think that we'll receive a strong increase of electrical vehicles. And of course, in such vehicles, the portion of products will increase over the time. So from that perspective, I think I would say such time, there will be quite a stable business. Is that fine?

Yes, fine.

Yes. I think we have now -- let us help a look, we have some questions. Well, let me start with the first one, from Alexander [indiscernible]. How will this acquisition affect the forecast for financial year '22 and after?

Well, in the end of the day, right, we do not yet know the closing date. So it really depends also on the closing. As Dirk said, we believe, we believe that acquisition to be accretive to the business, so to speak, but we do not yet know about the closing. So we cannot yet tell you, well, this much sales will be for '22 and this much profitability. So with that, I need to defer to the half year results or the well -- I don't know yet whether we do a closing kind of communication, but certainly, the half year results.

So then I will move on to the next question from Manuel Bottinelli look through level of indicative net debt after the Chinese Yantai and QSR acquisition?

The current level of net debt, we do not disclose what you need to take into consideration when you look at the kind of the financing situation. First of all, you start with the liquidity that we had at year-end, then rightly, there is the dividend payment, which you can actually assess there is the Yantai payment, and that leaves us with a liquidity at the moment. Obviously, we'll take part of the liquidity that, that value group has, but we will also have support from our majority shareholder and then also third-party financing, as I just said before. The level that we can go actually is higher than the CHF 625 million, but that's obviously not the intention. To give you a figure right now, how will that exactly look like in this moment in time, there's a lot of moving items, as you can imagine, there is a net working capital that is moving. There's running operations. We do not get exactly know when the closing will be. So in this moment in time, we do not want to tell you count of our assumptions, but we will talk about that because we will see it, and we'll discuss about that half year results in the press media release.

And I think the last question from Adreanne [indiscernible] goes a little bit in the same direction for financing transaction. Can you please give an approximate guidance and specify a bit further on the split between liquidity and debt? Again, as I said before, we'll have support from our majority shareholder, which obviously, for Dätwyler Holding is debt. We try to use a reasonable level of own liquidity after we have kind of closed Yantai XInhui and we have paid the dividend. So with that, I don't have any open questions.

Fantastic.

Yes, yes. Thank you very much, and thank you so much to all of you for this great questions. And I think I'm sure you will still have more. And -- but I think we cannot disclose everything today. I think you will fully understand that. So as let me summarize that, we have not signing. We have a clear plan how we would like to proceed here. And it's quite important to understand that we, of course, will come back with further information during our half year result, when we have a better information in hand to provide you more information, especially to the mentioned questions, which we have not fully answered. Today, at minimum, we try to give you a glance in which direction we are going. So finally, I'm really happy that we were able to acquire such a company, I think that will bring Dätwyler really forward and especially, again, it's very important that we are relying on our core competencies in the different fields, what you know meanwhile quite well, I think. So from that perspective, I think that is absolutely the right move. And now it's up to us to deliver that is clear and to stay focused. With that, I would like to end the call today. Thanks For your attention again and questions, and I wish you a wonderful day and looking forward to see you soon. Thank you very much.