Elior Group SA (ELIOR) Earnings Call Transcript & Summary

Hello, and welcome to the Elior Group's first half 2021 to 2022 results. My name is Josh, and I will be your coordinator for today's event. Please note that this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Esther Gaide, Group Chief Financial Officer, to begin. Thank you.

Thank you, Josh. Good morning -- good afternoon, everybody. Welcome to Elior Group's First Half '21/'22 Financial Results Credit Conference Call. I am Esther Gaide, I'm the Group CFO, and I'm together with Kimberly Stewart, Head of Investor Relations; and Francine Muller, who is Head of Financing. The first thing is the disclaimer. I think I won't read all that stuff to you. I will just -- will repeat that we have provided detailed financial information in our press release issued earlier this morning, which is available on Elior's website. I invite you to read disclaimer on Slide 2, which is an integral part of our presentation. If we turn to the agenda, we will review the first half '21/'22 financial results. I will also review part of the business, including the very challenging current environment we are going on right now and the wide-ranging margin restoration measures we are envisaging. In second part of this presentation, we'll review our full year '21/'22 guidance and our '24 ambitions and 2025 CSR objectives. With Francine, we will take your questions after our presentation. And I will start now on directly on the presentation. On the financial results on Slide 5. Turning to Slide 5 for the first half of fiscal year 2022, Elior Group consolidated revenues amounted to EUR 2.2 billion compared to EUR 1.9 billion a year ago. The 19.8% increase in business compared with the previous year reflects, first, the organic growth of 18% and in spite of 0.5% due to change in scope following the sale of CRCL in India last year and the stronger U.S. and British pound at a positive effect of 2.3%. Like-for-like revenues increased by 16.8%, a clear rebound from the 18% decline recorded a year earlier. On the right side of the slide, you will see that international revenues rose by 27.5% to EUR 1.3 billion, with all countries where Elior operates contributed to the rebound. Elior North America operations had strong organic growth, driven by K-12 education and dining and events, while the U.K. saw the strongest like-for-like growth with less stringent Omicron as protocols. If we turn now to Slide 6, you will see that the French government strict public health measures, which included 4 days of working from home in January, is reflected in the B&I white collar attendance that declined to 52% of pre-COVID-19 levels. To the right of the slide, you have a number of platforms closures in France and the health protocol levels. During all the prior COVID-19 waves, the highest number of classrooms closed was around 3,000. In January, it reached 10x that level. It is important to note that this does not include the classes that had low attendance only. On Slide 7, to provide you with a better understanding as to how this impacted Elior, looking at the chart on the left, you have the gap between the number of meals sold and budgeted, which dropped by 12% in January. As schools up to 10 a.m. to claim their orders for meals served the same day, taking into consideration that we start preparing the meals 3 to 4 days in advance at our central kitchens, you will see on the right of the slide that the numbers of meals wasted reached 6% in January. On Slide 8, you will see that this keeps our business operations, which, although the adjusted EBITDA margin improved from minus 1.3% a year ago, it remained negative at 0.7% for the current fiscal year. In France, adjusted EBITA was minus EUR 11 million compared to minus EUR 4 million a year earlier. International adjusted EBITA was a positive EUR 5 million compared to minus EUR 12 million a year ago, as those countries were less impacted by Omicron. This also includes a loss of EUR 21 million from Preferred Meals. As you may have read this morning, we -- it's a business that is in the U.S., representing around EUR 200 million of sales, and that has been operating with a loss, but I will come back on that afterwards on the business review. Corporate and Other EBITA, which includes corporate costs and the residual concessions activity not sold with Areas, adjusted EBITA represented a loss of EUR 10 million compared to a loss of EUR 9 million a year ago. Moving to the profit and loss statement on Slide 9. We already covered the first 3 lines. There was a EUR 2 million share-based compensation, noncash charge related to employee long-term incentive program. The impairment of goodwill amounted to EUR 119 million, split 50-50 between France and Spain, as the updated business cases of both countries showed longer delays in post-COVID recovery. A nonrecurring charge amounted to EUR 62 million was booked to impair value of Preferred Meals in the U.S.A., and I'll come back to that in the business review. Net financial expense was a loss of EUR 21 million, virtually unchanged with a year ago. A reversal of deferred tax assets in France and Spain were the main reasons for a EUR 46 million charge compared to a gain of EUR 4 million a year ago. Taking into account the net results from discontinued operations and minority interest, the group share of net results was a loss of EUR 266 million versus a loss of EUR 53 million a year ago. I'll leave the floor to Francine.

So let's now take a closer look at Elior Group's free cash flow on Slide 10. Starting from an EBITDA of EUR 64 million, we deduct EUR 33 million for CapEx. CapEx expense was 1.5% of revenues, which will increase, but remain below 2% in the second half of this fiscal year. We had a negative change in working capital of EUR 69 million, which I will explain in more details. Other cash items, EUR 22 million, included mainly restructuring in France and Spain. After taxes paid, we had a free cash flow of minus EUR 59 million. So on the next slide, the detailed change in operating working capital, which I would like to remind you reflects our geographical mix with continental Europe being more mature than North America, which is where we have more growth opportunities. Accordingly, North America consumes more working capital. This is again reflected in the change of operating working capital for the first half of '21/'22. With strong growth in revenues in the U.S., with a large swing in receivables, despite reduction in DSO which shows the working cap movement is really volume-driven. We also have payable repayments from the COVID-19 period, social charges, except in France, amongst them, and taxes. Turning to the next slide, which is the net debt. You will see our net financial debt, including IFRS 16, was EUR 1,108 million at the end of September '21. As we covered earlier, operations in France were adversely impacted by the unpredicted health protocol, resulting in negative free cash flow of EUR 59 million. Considering the intensity of the pandemic, to grow its capacity to manage cash with net debt up by EUR 112 million. The next slide, to review Elior's liquidity. At the end of September 2020 -- at the end of March 2022, Elior's available liquidity amounted to EUR 444 million compared with EUR 539 million at the end of September '21. It includes EUR 38 million of cash and EUR 320 million available on the revolving credit facility, which is a total of EUR 350 million. The remaining available credit line amount to EUR 86 million. Turning to the next slide. Lastly, on the debt side, we obtained a covenant holiday. The next covenant test will be based on Elior's fiscal first half results next year, with a leverage ratio to be met of 7.5x net debt to EBITDA. I will now hand back to Esther for the business review.

Thank you, Francine. So if we are on the next slide, we see that the top line trending up towards pre-COVID level. Top line is a good news. But what it's showing is that showing that step-by-step, we are going back to the pre-COVID levels we were. And I would say the end of Q2 was actually showing big progress compared to January, February, March was a very good -- COVID, and we are still going on with that because April is at 90% pre-COVID level. And as you see, we are at 87% before. So it's actually showing that we are on the first -- on the right track. And it shows that we are -- in terms of -- if you look at health and education, we are very close to 100%. And that's reason why we are still below a little bit of 100%, it's because as most of the time, we have cafeterias and those cafeterias are not fully open, still not fully opened right now. Which is true is in B&I, which is showing in red. It's probably the one that is the more difficult to grow. And we have 2 things. The first thing is obviously COVID and people coming back to the office, and it's also working from home. What we've seen in the last month is that, step by step, the numbers are going up. It will -- working from home will remain something important. It's something like we know for sure now. But the thing is when people are coming back to the office, and they are working along 2 days -- 1 day or 2 days per week, they are more eager to stay and to meet with their colleagues, which before when they were coming 4, 5 days a week, probably that was what we saw -- or we saw at that time that they were not eating all the days in the restaurant. So in any case, we see that people are coming back and that we are getting to pre-COVID levels very quickly. Next step. Second -- the second good news is that new business is strong. We have 9.9% of new business, which have been contributed to the organic growth. This is a record level in the -- for a long time. And it's true that it's combined with the retention rate that remained stable, As you will see in the next slide. In any case, it shows that we are -- we have been right to incentivize people in development. We have been -- as you may recall, 4 years ago, we communicated on the fact that we incentivized people on retention also. And now it's true that we have a third KPI, which order to incentivize, which was to reward people in developing the net development, which was they're supposed to develop more than they lose. If we look at the next -- that's what I was talking about, new business turning positive. It's true that we have -- this is very important in terms of making sure we are fighting on every single customer. In the meantime, we have been going through a strong inflation pressure. And when will be -- when we've seen the EBITDA level, we have been going through COVID in the first quarter, with Omicron penalizing a lot education and B&I, because, obviously, education that was the first time the kids were tested. And in B&I, we went from 3 days per week in working from home, we went to 4 days. So it was actually a very bad time. At the end of that bad time, then came inflation, mainly in Europe. In the U.S., inflation came before. We have been trying to summarize in this schedule the inflation we see in the different categories and in the different countries. What is actually true is that the country, which is very impacted since the beginning, is the U.S. It's also true that in the U.S., the work on the renegotiating the prices has started very shortly and very quickly. If we go -- turn to the next step, on the 4 priorities for margin restoration, we have put in place wide ranging margin restoration based upon 4 drivers. First, price increase. It's our number one priority. It's really the only way to try to mitigate the big numbers we are talking about. It's -- we are -- we have been showing last year the structure of contracts. Compared to our peers, it's true that we are -- we have more contracts on the P&L format, which is more difficult to renegotiate because you need to go through all the renegotiation with your customer and which is very different when you want to add the cost plus. On a cost plus, you don't have to renegotiate, it's automatic math. When you have P&L, as we are, it's very different, and it's why we needed to get very organized on that, mainly the main countries where we started to work with consultants to apply a methodology and to make sure we had a strong follow-up was France and Spain. And secondly, we have one-on-one discussions with almost all of our clients. And it's true that it doesn't -- one size does not fit all. We need to discuss with the customer. You cannot just send a letter saying, we're going to increase the price by X. It's not going that way. There is no one solution there, but different solutions that we are using and we are intending to put in place with the customer. Again, the question is to keep the customer, to make him understand why we need to do -- to increase the prices because we don't want to jeopardize the quality of our work. One solution can be to use other proteins than -- move the proteins, to use more vegetable sources. It's also to replace some products by other products. It's also to maybe for a time to decrease local organic part of the food. It's also to reduce the number of the serve, but more fresh -- more fruit than before. We are also trying to make them understand that we need to adapt to seasons, which is to use the right vegetables and fruit for the season and not buy them in a very expensive way. So that's using tomatoes in summer and not in winter, and all you can imagine. Thirdly, we are in the process of reviewing and terminating, if needed, unprofitable operations. We'll come back on Preferred Meals. But that's what -- we also want to check that our production units are properly filled and none of them are loss-making. Last, we need to intensify our cost savings on procurement, on food waste and also on SG&A. The next page, you have the contract type, we have by countries. And you see that the difference with our peers is that the red -- the dark green is cost plus. You see that it's true in just 2 countries. And again, it's not the majority of it. It's 19% in the U.S. and 22% in the U.K. However, that's -- I mean, in these countries, it's probably easier to renegotiate and because the customers are used to talk to inflation. In France, Italy and Spain, it's a little bit more -- it takes a little bit more time. We do have index clauses in our contracts. But as you imagine, the index clauses are from the past. So we probably -- we need to renegotiate now whatever anniversary of the contract is, we need to renegotiate now. What we have also been doing is that we have asked our sales manager and we have put them on some very strong objectives, objectives that are also correlated to another bonus in some countries, and it's true for France, Spain and, I guess, Italy. So let's talk about Preferred Meals. Preferred meals is an industrial activity in the U.S. It was heavily loss-making in the last 2 years, $55 million last year and around $40 million on a full year basis in this year. It was an industrial business, representing around 220 million of sales. I just gave you the EBITDA level. For the -- we bought it in 2016. It was not core business. I would say that until 2020, this company was manufacturing pre-plate and meals for K-12 schools. However, we also had an activity which was emergency meals. The emergency meals were meals that were bought by federal government or cities in case of hurricane and in case of pandemic. So during '18, '19, we had hurricanes in the U.S. In '20, we had pandemic. But at some point, the cities and the federal government stopped to buy that kind of emergency meals. And then we were left with the pre-plate and K-12 activity, which you probably know that, it's not -- it's a fixed price -- fixed by the region, the government, and it's not possible to make any kind of profit in that business. It's a volume business. The second thing, it's not our core business. We are not an industrial company, and it's -- so when we found out, we went through a review -- strategic review that was -- that took time. In the end, when Bernard Gault joined the group on March 1, he reviewed the topic. He came back with a conclusion when he came back from the U.S. and he shared that with the Board that this activity had nothing to do with us. The last idea we had was to sell it. It was very difficult considering the level of losses. And we have -- it has been decided to voluntary exit, which is winding up, announcing to the customers, which are yearly accounts because it's mainly to schools, and we have 60 -- in general, 60 days to announce that to the customer that we will not be starting again in August and we will be selling some assets. And consequently, we have been also impairing in our accounts, the value of this asset as of March 31. If we go to the next step, yes. So I've been giving you that. I don't have all these. Which one is it? Contract? Yes. So I have not been covering that. So you have -- the contract negotiations are progressing. We have reporting that has been put in place at the group level. We are reviewing all the contracts with a certain trigger in terms of profitably level we are willing to have. As of March 31, 37% of contracts have been fully renegotiated worldwide. You see that the most -- in the U.S. and the U.K., as I was mentioning, they are progressing very well. So far, we haven't been so many contracts to be voluntary terminated. And there is a strong, strong commitment from the Elior team to go strongly on that renegotiation program because it's actually really important to achieve that. The last -- next slide is on what I was mentioning on Preferred Meals. Fresh frozen snack/prepared meal production acquired in 2016. What we are planning is to exceed that before the end of current fiscal year. So at the same time, we are pursuing new growth opportunities. We just give you one, which is a new thing in North America, which is in the health care market. It's making us -- it makes possible to leverage some of the central and national to produce frozen meal capacity. People when they come back -- they come out from the hospital, some of them need to go through a very strict diet and actually is to be able to bring to those people who have been leaving the hospital, the designated meals with the right level of all the things they need to eat and not what they don't need to eat to make sure that they are recovering at the right path. This is very limited investment with, to our knowledge, strong return, and it's working together with the insurance companies to be able to do that. That's the kind of new ideas. We are trying to leverage to improve and to grow. And now on the conclusion. So we are giving you the outlook for '21/'22. So the organic growth would be at least 16%. EBITDA at breakeven, but excluding Preferred Meals, estimated loss of EUR 35 million for '21/'22. And for the CapEx, we still believe we will be below 2% of revenue. As of March, we are at 1.5% today. On the next slide, you have the financial ambitions for 2024. For the organic growth, at least 7% CAGR on average '22/'23 and '23/'24. For the adjusted EBITDA, a margin around 4% in '23/'24. We still keep as an ambition CapEx between 2.5 -- sorry, CapEx will be around -- between 2 and 2.5. But the organic revenue growth, which is over CapEx, which is showing the growth over the CapEx spend, it will be between 2.5 and 3. And one of our mission will be also to restart dividend based on fiscal year '23/'24. And you have on the next page, the CSR 2025 objectives, which are reaffirmed. So to conclude and Bernard Gault concluded this morning with that. He's -- even if he's interim CEO, he feels very committed. And the teams -- Elior teams are very committed to all the challenges they have in front of them. They are going there with method and determination. And with Francine and with Kimberly, we are very happy to answer to your questions.

[Operator Instructions] Our first question comes from the line of Laxman [indiscernible] from ExodusPoint.

First question is not entirely clear to me from the way you've presented things. Have you drawn on the RCF? Or did you draw the RCF during the first half of fiscal year '22?

Francine?

It's -- when I presented the liquidity slide, we have EUR 320 million less out of EUR 350 million. But that means at the end of March, EUR 30 million are drawn.

And that was a cash drawdown, that was not guarantees or anything like that?

No, it's cash drawdown. We don't draw for guarantees or anything like that.

Okay. And so you ended March '22 with a cash balance, excluding the overdraft of only EUR 2 million. Why did you sort of leave your cash balance that tight? Were you not compelled to draw down on the RCF a bit more?

We don't really -- no, we -- I mean, the EUR 38 million is really what is left. At the end of the day, when -- all the cash pooling have come back, et cetera, et cetera, we don't need more than EUR 38 million at the end of the month. We are perfectly comfortable with that.

Okay. And then just comment now, in terms of liquidity, you also talked about EUR 86 million of availability under other credit facilities. What are those other credit facilities?

They are mostly uncommitted overdraft lines, which have not changed over the last 2, 3 years.

Got it. Perfect. Okay. And then moving away from liquidity, just a couple of quick questions. Your firm is obviously working quite hard to renegotiate some contracts and some pricing in light of the inflationary environment. Can you just help us understand what the terms of the renegotiated contracts are? What the contract length might be? And really trying to understand on this point, ultimately, your contract base is still predominantly P&L-based or fixed cost. So when you renegotiate these contracts, what I'm trying to understand is, what is the structure that you're renegotiating? For example, if inflation were to pick up further will you have to go back to the same customers? Or are you assuming that inflation is going to behave in a certain way? So I just want to understand what it means to renegotiate these contracts from Elior's perspective?

So the -- yes, as you've seen, most of our contracts are P&L. Most of our contracts also have index clauses. The thing is now why we need to go back right now is if we are waiting until the CPI applies because it's computed on the past. It won't give us anything. So we need to go once now to ask for 5%, 6%, 7%, whatever is necessary. And this is why we are reviewing a contract by contract. And then we probably need to monitor that very thoughtfully just to make sure. We don't have the same issue in 3, 5 months. Inflation has gone up to the roof. We will have to go before. Just the rating, but it's the way it works. The contract length is really depending, it's between 3, 5. You can have automatic renewal. So that's the way it works. It's much more -- I agree with you, it's much more comfortable to be at cost plus. But again, the customer in these countries, which are mainly France, Spain, Italy and even on some of U.S.-based and U.K., they have asked for P&L.

Just to kind of help flesh out your answer here. You're going to the customers for effectively a one-off price renegotiation because inflation is running very high.

No. It's not a one-off. It's not a one-off. It's saying -- we're coming because we cannot stand and we cannot provide you with the food you're asking, with the menus you are asking, with the level of inflation we have on 2 things: labor and COGS and price of food. So it's going back saying we need to increase prices by 5%, 7%. and then if -- we will be following up very thoughtfully. And if it's not enough, we will go back.

So I guess what I'm trying to understand is if inflation is 6% again in 12 months' time, do you have to go back to these customers and renegotiate? Or is that already done?

We'll look at the CPI. And if the CPI doesn't give us 6%, we will go back.

Understood. Perfect. And then I have 2 more questions, and then I'll jump back in the queue. On the education segment, you had a slide running through the impact that had in terms of the percentage of meals wasted and things like that. I think it goes to Slide 7, it was. Could you quantify the impact that had on gross margins?

No, I don't think we did it like that. Well, just to show how big the impact of nickel was in France. Just to show...

Can you give us a sense of what the impact on your business was?

It's not analyzed like that because we have a mix of the waste. We have -- of production, we have the -- also the waste -- because we had more people, we believe it was not possible to plan the people that were coming to work and we had more. Because when you're planning for 200 people, in case in the end, you have 100. So it's a mix of a lot of things, but just a total of this organization. And it was very -- at that stage, because it was actually before all the COVIDs, we didn't have that because kids were not tested in France. And so the only part of the business that was working very strongly during that period was that. And when in January, they started testing the kids, we came across with a very strong reorganization.

Yes, I understand that. I was just curious because obviously, that impact is fading now because Omicron is behind us. So I'm just curious as to if that impact had not happened in 1H, what kind of profitability would you have reported? It sounds like you don't know the answer?

No, we know if we didn't have so many COVID, we would have make -- would have made. The thing is that -- that was between Q1 and Q2, mainly in January. And then we were hit by inflation in France.

Okay. Understood. And then just a final question, and then I'll jump back in the queue, which is on later in the deck, I forget which page, but you gave guidance around the nonrecurring cash costs, which is EUR 50 million to EUR 60 million in your deck. That looks like it's the same number as you guided to last year. But obviously, you're now shutting down this U.S. business. So there's the nonrecurring cash guidance of negative EUR 50 million to EUR 60 million, include the U.S. business impact or?

Yes. We have plus and minus issue. Recall last year also had France, where we were planning to have 2,000 people leaving the group. In the end, we're going to end with 1,000 people only leaving the group because in the meantime, some people have left. Some people have been replacing people that have left. So it's...

The number is the same, it's just the composition of the numbers has changed?

Yes. Yes.

Okay. And so it looks like, based on that guidance and what you're hoping for EBITDA breakeven for the whole year, it looks like once you include lease repayments, cash interest, the CapEx you guided to and everything else, you could burn through another EUR 100 million of cash in the second half of the year. Do you agree with that?

No.

So what do you think your cash plan will be in the second half of the year?

I didn't guide on the cash burn. I didn't.

Well, I know you didn't guide, but you guided on everything else. So I can just add it up, then I get to about EUR 100 million of cash flow. Is that roughly correct? Or do you think it's going to be better, it's going to be worse?

I think that -- no, I think it's going to be -- that's the worst case, very worst case.

What's the best case?

Well, the best case is depending on the nonrecurring. For instance, I have included Italy. In Italy, we have furloughs. As long as we have furloughs, we cannot get people out. So I won't spend that money. In Preferred Meals, I have working cap that is going to be -- need to be getting in which is customers paying. Inventory has been sold. All the other suppliers to be paid. And then I have the assets I need to sell. The leases I need to give it back to the leases, but they are very interesting because they are below the cost of the -- they are below the market. So it's a sum of things. And this is why we didn't give any guidance on that because it's a sum of things we are managing now. And it's difficult to say, well, the best of the worst case is, what we have been doing for the last year is managing it so fully as we can, all the parameters.

The next question comes from the line of Manu Nair from Chenavari.

Just a couple, if I may. I think on the 4 priorities for margin restoration slide, you mentioned SG&A. Could you explain perhaps what this involves? What kind of cost can you take out of this? I assume, given that you answer to one of the last questions, you mentioned furlough, et cetera. So can you just explain what all actions you can take in reducing your SG&A costs further?

Again, it's to go through a review on what can be done more in terms of reducing and improving the SG&A. So we have ideas with Bernard, and we are working on them. But it's -- I cannot be more precise today, but that's one of the topics we are reviewing at the group level.

Okay. Sure. Then in that case, just related to that, I mean, when I look at your -- for example, your gross profit and your personnel cost line items. I'm just trying to figure out where the impact of inflation really comes through because it seems like a small margin impact at the gross profit level, but not anything significant, whereas your personnel costs have obviously increased as, I guess, you expected performance should be much better in H1. So can you just talk about -- I'm just trying to figure out, when you talk about cost cuts, where exactly that can come through? Because it sounds like the most possible places is personnel expenses. So in other words, are you planning to have some layoffs perhaps later this year, into H2, or even early next year?

Again, as you know, we cannot talk about layoffs before we have announced to the employees. We are considering things to reduce SG&A, but it's also reducing the leases, reducing the square feet we are renting, optimizing the different sites. So it's really a sum of things, which, again, one by one is -- what we are reducing also we are trying to reduce is the nonrecurring. As I explained, we have put an investment committee in this group. And when we have nonrecurring that is coming above 500,000, we need to explain what kind of payback we have on those costs. So again, that will go through that kind of analysis. And basically, that's what we are doing. But as you mentioned, when we have been through such a decrease in top line, we need to adjust the SG&A. And it's probably doing some kind of rationalization of the manpower.

Understood. Two more questions. I mean, as part of the covenant waiver, did the margin on the RCF, was that increased at all? Or is it -- does it remain at the same level?

Now with -- for the waiver, we didn't give any other thing than a flat fee of...

EUR 2,500 to the agent. That's it.

Excellent. And finally, I think on nonrecurring expenses, I think on the last call I asked a question on this. Sorry, I didn't quite catch it. What do you expect for FY '22 in terms of nonrecurring expenses? I think I heard 50 to 60, but where is that referenced?

Now EUR 50 million and EUR 60 million was actually the modeling numbers we gave. Today, as of March, we're at EUR 22 million. So I'm planning to be -- not at EUR 60 million as of the year-end because I'm pretty sure some recurring will be -- if not canceled, will be delayed. After that, we have some stuff which we need to go more in detail, it's P&C. Again, I'm not expecting -- in my best scenario, I'm not expecting a huge amount. But still before disclosing, we need to have a more -- worked a little bit more in that. So that will come with the September numbers.

Sorry, just to summarize that. So you expect EUR 50 million to EUR 60 million for the full year, of which EUR 22 million has already come through in H1. Is that correct?

Yes.

The next question comes from the line of Giulia Rusconi from Reorg.

I have 2 quick questions. Regarding revenue growth, is there a business segment that you want to focus more in the short or long term and would drive the volume or the business recovery and growth up even beyond COVID levels -- before COVID? And do you expect a permanent loss from working from home arrangements and installing what amount? And the second question, if you could provide us some more guidance on your working capital? And how do you expect to revolve in the remainder of the year?

So on revenue growth, it's -- we really feel strongly that the U.S. will drive the growth and international will grow -- will drive the growth. We are in France and Spain and Italy in mature markets, where outsourcing is already very important. And we really feel that the U.S. should be the territory where we can make things happen. This is also why we want them to be fully busy and focalized on developing their business instead of managing bad stories like Preferred Meal.

Which segment in the U.S. would drive it? Like is it education or the business or health?

Well, we are very small compared to the big ones. So we have been working on niche. We are, today, as I was mentioning, trying to develop in some segments where we are close to the health system and making sure we can leverage our central kitchens. So it's, for instance, that opportunity we have with the people who are on the diet, but outside the hospital. We have Meals on Wheels. We have that kind of business. We are also starting to get some new customers on higher education with -- every time it's with the right level of margins and the right level of payback and KPIs. We are -- again, we put that investment committee in place because we wanted to make sure that every time we're taking a contract, it was at the right margin and at the right CapEx level. On the working from home, yes, we see trends. It's -- again, it's very different from the U.S. and in Europe. In France, for instance, we see that people -- well, blue collar, they have no choice. They need to go where there is no work from home. On the white collar, we see a difference between the Paris area and the rest of France. What we see also is before when people were coming -- we already had people working from home 1 day a week. We see that now it's around 2 days a week, what is agreed by big companies. But what we see is when people come to the office and they come only 3 days a week, most of the time, they don't go out to have lunch. They stay and they spend time with their colleagues. And what we also see is that they are spending more money. So it's a kind of trend. We hope it's going to stay like that. I would say, step by step, we are seeing people coming back. So we'll see if it's a longer trend. We have -- as you may not know, but the sanitary restrictions were finished in March 14 in France, which is not so far. So we have very little time to have a real opinion on that. In any case, we have been preparing to that work from home. What we have been putting is a click & collect solution for people that want to eat quickly from -- in the -- at their office, which was not possible before. In France, it was forbidden to eat at your table. We have been putting things. What we are pushing is to be able to take food home. At the same time, you can take your lunch, you can take your dinner, and that was not possible before. So trying to get sales around the other meals, you can have when you're not in the office. So on working cap, what I can tell you is, historically, the working cap at the group level was breakeven. When everything was, before COVID, usually France was very negative and the U.S. were very positive. So all in all, we were at zero, with COVID have been still bit upside down. And what we have seen in this H1 is that the U.S., because they have been developing, they've been growing by 100 -- more than 130 million, then we had a need to increase -- I mean, the need to increased -- need in financing in working cap. At the same time, during COVID, we had delayed payments authorized by some governments and some social charges also. So we are paying those until mid of next year. So that has been penalizing on our performance. On the full year, I hope to improve until the end of the year. That what should happen because, again, H2 is usually the good semester for the working cap. And we have a very strong push and KPIs on DSOs and on some cash KPIs to improve to make that people are very, very cautious on their working capital.

Our next question comes from the line of Yin Wu from M&G Investments.

Just really simply really, I know you've got your covenant waivers set for next March at 7.5x, and then a drop-off to 4.5x the preceding September. And you've given us a guidance of how revenues -- you expect revenues to develop up to that period. In terms of the margin side of that equation, are you confident that you won't need to renegotiate that, you'll come under 7.5x? Because I think you're quite away at the moment. And then obviously, from 7.5x, the progression to 4.5x, that's quite a steep drop off in the time between those 2 periods. So just overall, a feel for where you think you will be at those covenant tests, please?

Because the recovery is mainly from 2 countries, France and the U.S., they are the bigger ones, and we are putting all our efforts on that. And we have a very strict plan and follow-up on that. And the first step was already to close Preferred Meals and to do it in the next one is to spend more -- most of our assets on France. So I mean, that's a very thorough exercise we've been going through with Francine and the teams. And I would say that it's not only finance deciding, its operations committing to what they actually -- we have been putting that bottom up with them. So it's really a commitment from the bottom, from the restaurants, to the team. After that, when I gave the guidance in November, I wasn't expecting 2 waves of COVID. And I wasn't expecting, and I don't think anyone was expecting the level of inflation we got. So we have been putting that together with everything we know. What I can ensure you is that we are following very thoughtfully the cash and the different topics. And yes, that's what we can do as of today in taking the right decisions and pushing for the renegotiations because it's actually the central topic, really central topic.

Okay. I think that was the last question on the call today. So I'll hand you back over to the speakers.

Thank you very much for your attendance to this call. Thank you for your questions. And we'll talk later, I think in -- at the end of H2. Have a good afternoon. Bye-bye.

Thank you. Bye.

Thank you very much for joining the call today. You may now disconnect your handsets.