Esprinet S.p.A. (PRT) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Esprinet Q3 2023 Results Conference Call. Please note that this webinar is being recorded. And after the call, the podcast will be posted on the Esprinet website in the Investors section, together with the presentation. [Operator Instructions] Please note again that this presentation contains forward-looking statements. So I would like to draw your attention to the regulation note on Page 2 regarding the information contained within this document. I'm Giulia Perfetti, Investor Relations and Sustainability Manager of Esprinet. And with me is Alessandro Cattani, CEO of Esprinet. I will now turn the call over to Alessandro to present and comment with you the Q3 2023 results. Alessandro, the floor is yours.

Thank you, Giulia. Hi, everybody, and welcome to this presentation. We jump immediately into the highlights of what happened in our company and what's happening in the market during this period and in the immediate future. So first point is all around the forces driving the sector. We have been serving quite a moment in terms of geopolitical and macroeconomic instability. And this has been reflected in the worsening of the ICT distribution volumes across all European countries. Recently, the analysts reduced the short-term expectation, predictive flat or even slightly negative Q4 sales trends for Europe and for the areas where the group is active. So Italy, Spain and Portugal. More specifically, the retailers and e-tailers customer segment, which is representative of the private consumers behavior was down 11% in the first 9 months of the year and minus 16% in Q3 '23 alone. There's been also a slightly more cautious performance by companies. So the business segment -- and what we have observed in the market and what is coming out of the vendors, customers, and analysts is the fact that companies are deferring not strictly necessary expenses, but they're keeping long-term strategic projects. And last but not least, the growth rate -- growth in Solutions has been slowing down and is expected to slow down during Q4 '23, mostly due to the fact that this slow in demand, but also because of a challenging year-on-year comparison. Remember, we are out of 2 years of target growth in this segment. As by what's happening with us, the outlook for the quarter is not bad. We will comment it later on. Italy is performing pretty well. We had a pretty tough October in Spain, but things apparently November so far are doing fine. So we have reconfirmed our guidance also based on what we're seeing in the market for us in this moment. As by 2024 projections, the analysts keep on confirming estimates for recovery, probably there would be a lower growth in the first half and stronger in the second one. Of course, we all are, in a sense, depending on potentially external shocks, be then positive or negative. And that might change the overall backdrop, accelerating the recovery of slowing it. Obviously, the end of the war, or a sharp reduction in inflation and potentially a reduction in interest rates might accelerate recovery and anything in the other direction might slow it down. But Screens, especially PCs are forecasted to grow again. After 2020, 2021, where sales were at record high. The last 2 years of sluggish performance are expected to be eventually over. There's 3 reasons behind this optimism. The upcoming replacement wave, there's been a lot of PCs and not only PCs sold in 2020 and 2021. So we are, especially in the business segment, we are getting closer to the normal moment in which replacements need to be done, for the natural product life cycle. We are close to Microsoft's Win-10 end of life -- end of support. It will be in 2025, but historically, one year before you start to see traction in the change of products that are not supporting Windows 11. And last but not least, there's a bunch of new products that are hitting the ground AI-ready with strong let's say, compute capabilities, which should be activated by a wave of software products that are expected to hit the ground in the next year and so. And so midterm AI-ready products, be them PCs, servers or even smartphones, will drive further acceleration in the growth of this category. And remember, Screens, PCs and smartphones still represent 54% of sales -- of the group sales in the first 9 months of this year. And so a recovery in this area will definitely be a bonus for our performance. The investments in digitalization of both companies and especially the public sector funnel by the NexGenEU funds are expected to be there and keep on being executed, although at a slower growth rate. And we do expect, of course, an easier comparison against a soft 2023. So that's for the market. What about us? Well, it's been and it is a year of transition. We are accelerating the implementation of our group strategy, which we have stated more than once, and we have been doing it between geopolitical and macroeconomic instability and a lot of ICT sector challenges. More specifically, what does it mean accelerating the strategy. Well, first and foremost, we are accelerating the strengthening of V-Valley. Our Solutions & Services business is grouped under the brand V-Valley, separate legal entities taking care of this highly profitable business area. And we have been recording growth more or less in line with the market, but we are beefing up the structure and putting investments into this area, not only organically but with acquisitions as well. The growth in interest rates were the main reasons behind the accelerated exit from the combinations of product/customers with a low return on capital employed structurally low, return on capital employed, especially in the consumer segment. We declare in our long-term strategy that we were pushing more and more in the V-Valley direction, so Solutions & Services, and progressively walk away from the lowest margin or low or highest working capital intensive combinations. The explosion in a short time of interest rates was a catalyst to accelerate this exit, and we are adjusting the cost structure accordingly. It took some time. We're doing a lot of work in this quarter as well, will we keep on adjusting the cost structure. And we do expect SG&A to eventually start declining, especially in the Esprinet segment of our business. So Screens, Devices and own brands. What is good is, apparently, the consequent loss of market share, especially in this area is now hopefully stabilized. There's still some work to do but lots of what were in our opinion an acceptably low return on capital employed businesses have been dumped. There's still some work to do, but most of it has been done. And the gross profit margins grew significantly, almost for all business lines. We are particularly pleased with this. And even more so, because we have been able to absorb both the inflationary impact of transport costs, which are booked into the -- are booked into the gross profit margin. And it's quite a number but we were able not only to reduce -- to absorb the inflationary impact, but even more so to reduce the cost overall by optimizing our freight cost as well as charging more for higher cost to our customers. And we have been able to absorb also the higher cost of factoring. We do factor sell without recourse receivables, especially in the retail segment. The cost has been growing enormously and the cost of this factoring goes into the gross profit margin. Just to give an idea, last year, the weight of -- the cost of factoring on revenues within the gross profit margin was 13 basis points. It was 30 basis points more this year. Nevertheless, gross profit margins grew. And that is really, really a significant achievement. And that is the testimony of the hard work done renegotiating terms with both vendors as well as customers and adjusting our go-to-market strategy, improving our customer service levels. And all of this notwithstanding the strong activity of inventory reduction. We are down hundreds of millions from the peak of inventory achieved last year. We've not yet finished the work, but we were able to reduce enormously the amount of inventory without impairing our gross profits quite the other way around. We are working hard on cost optimization activities, and that is another important point, because we are reallocating resources from Esprinet to V-Valley, and we have been able to reduce the cost growth rate. And as I said before, we are paving the way for an expected decrease of the G&A in the next months. Working capital improved, with lower inventory levels and better financing terms from vendors, but we have been affected by an increase in DSOs mainly due to a lower use of factoring. The nominal terms to customers have been stable. So it's mostly a matter of customer mix and lower utilization of factoring. We have used 2023 also to close the dispute with the Italian tax authorities. We have signed a blanket agreement with the Italian Tax Authorities. Numbers are already fully booked, and they will be paid. They have been charged in the P&L entirely, but they will be paid in 5 years' time. And based on everything said so far, we confirm the guidance, EUR 70 million to EUR 80 million of EBITDA adjusted. That would mean being approximately equal to 2020 EBITDA, in 2020 it was 69%. But with gross profit margins and EBITDA margins well above 2021, having achieved them with lower revenues. What about the future, the macro and geopolitical scenario has changed the ICT market. It looks like yesterday, when we were thinking of a major growth in terms of the GDP out of the pandemic, but then war, inflation, rise of interest rates, all hit the market and changed the scenario for all industries, I would say. Their trends are fading, new areas of growth that are emerging, mostly generative AI. It will be a key driver of growth, not necessarily next year but in the following ones, not only at software level, but even at device level, so products -- physical products will be redesigned embedding silicon that will allow higher compute capabilities as well as embedded AI software. Cybersecurity and risk keeps on growing and building resilient business is more and more a priority. Everything as a service and outsourcing are transforming models that drive change and will be seeing lots of news in this area. And last but not least, the move to sustainability could be a huge impact. Think of a circular economy and new typology of products that will hit the market. Last but not least, the ICT market is also conquering the adjacencies. The world is increasingly witnessing the convergence of some sectors towards the tech one, take the green transition that's bringing a lot of new opportunities to the broader tech industries. We are thinking about green energy, renewable energy, electrical mobility. So in light of all these innovations and the growing need for outsourcing that is out there in the market requiring companies such as Esprinet to provide even more activities and not only products. The group is quickly adapting its strategy. Apart from pushing furthermore in the Services as well as the Solutions segment with V-Valley, and again, investing in M&A, vertical M&A, as we did recently and as we're willing to keep on doing in the future. There's a lot of other things happening. So this upcoming year after the AGM and the appointment of the new Board of Directors scheduled routinely after 3 years. So in April next year, the Board will reconvene and will present renewed strategic plan, most probably before the summer. So that's for the market and the opportunities that we've seen. If we go quickly through the highlights of the first 9 months, the key area on which we have been executing in this transformational year, has been gross profit margins. We are at the fifth consecutive quarter with gross profit margin growth. Gross profit stood at 5.61%, 4 years ago, we were more than 1% less in terms of gross profit margins. And we grew 39 basis points, more than 5.22% of the first 9 months of 2022, and 8 basis points up sequentially against H1 '23. And remember, all of this in a context in which we have been bearing the grant of more than 30 basis points of higher interest rates out of factoring in gross profit, which were transferred downstream. In Q3, the gross profit margin grew to 5.8% despite the slowdown in the growth rate of Solutions & Services. We have been hitting on all cylinders in terms of profitability at the product level. The -- what impaired that the result has been essentially a loss of revenues and the fact that the G&A have not yet began to go down, we are almost there. The growth in -- of G&A in Q3 this year against Q3 last year was roughly EUR 200,000, EUR 300,000, so minimal and hopefully, we'll start seeing a reduction in the upcoming future. What's really important for us is we aim at improving our EBITDA margins. And as long as we have historically had a very, very efficient processes with low G&A of sales, the mandatory activity for us has been in these last years to grow the gross profit margin because growing gross profit margins and controlling the G&A would entail a potential growth in EBITDA margins. Well, both because of a better mix and generally higher gross profit margins on single lines of products, we are paving the way for this process, and we're pleased with what's happening there. As I said, this is a transition year. But we're pretty confident on what we're building for the future. If we look at the financial structure, the trajectory, towards the more sustainable working capital level is confirmed as improving. The third quarter, which is historically the weakest in terms of cash conversion cycle, sees an increase sequentially of only 7 days against a historical leverage of 12 days. And that's even if we have increased the DSO mainly due to a lower use of factoring. The net financial position is negative by EUR 260 million against the EUR 380 million of last year, and EUR 207 million of June, but what's quite remarkable is that we have dropped the factoring utilization in Q3 against Q3 last year by EUR 160 million. So not only we are down from EUR 382 million to EUR 260 million in terms of net financial position, but we have also reduced factoring by another EUR 160 million. So a really, really strong improvement in our working capital -- overall working capital management. And if I -- if we compare Q3 this year against Q2 of this year, sequentially, we grew our net financial position from EUR 207 million to EUR 260 million, so EUR 53 million more, but we have reduced the factoring utilization by EUR 120 million. So again, an improvement and we're happy about what's happening. We do forecast a pretty strong end of year in terms of financial structure. Now in terms of sales evolution, the picture is pretty self-explaining. We have lost share in all markets, but more so in the -- if we look by customer type, market in the first 9 months has been down 11% on retailers, and we have been down 26%. Market was up 1% on resellers and down 9% for us. And mostly, that has been the result, as I said before, of walking away from really unprofitable combinations, mostly Screens and to a lesser extent in Devices. The Devices that we have lost are mostly consumer ones, so specifically TVs. In Italy, there has been a lot of activity on TVs last year because of some specific government incentives. And then there's been also a reduction in white goods, again, linked to poor consumer consumption. We have been outperforming the market in Portugal, but we will do activities in order to walk away from certain unprofitable or not really unprofitable in combinations with unacceptable return on capital employed in Portugal as well moving forward. Italy and Spain have already paid the grant of the activity, mostly Spain. Italy, especially in this quarter, is performing pretty well. Spain was really under pressure in October, but it's doing pretty fine in November. We start to see year-on-year comparison that is milder because lots of this proving in lowest return on capital employed activities began end of last year. And so we are almost over at least in terms of comparison. So that's for the sales evolution. Well, in terms of profitability, already commented to a large extent, what happened, I would draw the attention on return on capital employed is too low for our liking. And this decrease is essentially due to an increased average net invested capital linked to the increase in average net working capital. So we're working on that, and we start believing that things should turn much better next year. If we look at the P&L by pillars, we have grouped the Esprinet pillars, Screens, Devices and own brands and the V-Valley pillars, Solutions & Services. And as you might see, the decrease in EBITDA margin and EBITDA in absolute terms, is completely linked to lower absorption of fixed costs. As a matter of fact, the gross profit margin has been growing particularly well, especially in Solutions, where we had a very good performance on software. Software is the highest growing area in the market. Unfortunately, we don't have enough of a product portfolio over there, even if there are movements in the market that might hint to the possibility to some incumbents might lose their grip on certain software vendors. So we are well positioned, hopefully, to profit from these moves. Services are doing incredibly well. And within Services, we have also our Esprinet finance division, where we have also our Esprinet [ rent ]. Renting is still way, way below our expectations, but the Services that we offer, not with our renting but with the renting of third parties where we get our share of profitability, are doing very well. So the margins are pretty good here. And that's an area where we think we will do even more in the future. The -- it's pretty remarkable to show that Services with just EUR 7.6 million in revenues, posted -- contributed with EUR 4 million of EBITDA adjusted against EUR 9 million or less twice made by Screens, which we have made with almost EUR 1.5 billion of sales. So again, more and more V-Valley is our focus and Esprinet will keep on providing good traction, only and only if the return on capital employed and specifically, the working capital will be under better control. And there's a lot of signals that there are things happening in that direction. If we look at the P&L summary here, you can find the numbers. I draw just the attention to the nonrecurring costs, we booked the blanket agreement with the tax authorities. It's a split in the ordinary reporting. It's a split EUR 20 million, EUR 26 million roughly above the EBITDA and roughly EUR 6 million to EUR 7 million are in the interest area -- in the interest line. For the sake of clarity, we have moved everything below the line and as nonrecurring costs. From a financial standpoint, this blanket agreement, I say it once more, will be paid in 5 years, but the cost has been booked fully during this year. The other numbers, I think we have commented pretty extensively. So if we look at our balance sheet, well, the -- I think the interesting point is the evolution of our net operating working capital. Last year, in March and in September, we had really, really high numbers in terms of, especially in September last year, in terms of working capital. We kept working on them. We are now on average roughly EUR 200 million less and we do expect to have a pretty good year-end. Inventory will be significantly down by year-end. The big question mark is always the mix of customers and how much receivables will be able to sell as nonrecurring. But we always use the moving average as a better proxy of our average consumption of capital. And if you look at the 4 quarter average, we have been reducing one day of working capital for the last 2 quarters in a row, after a sharp increase during all of 2022. It's a better visible at quarter-by-quarter level. But nevertheless, we had a peak of 59 days of inventory as an average in Q4 2022 decreased to 54% in Q3 this year. We are getting a stable, very healthy financing from vendors, north of 70 days. The increase of the DSOs, as I said, is mostly linked to a change of customer mix, so much in a change of the nominal terms to customers or the increase in delinquencies that, by the way, are particularly low. So it's mostly linked to this kind of different mix and different level of utilization of factoring. And if we look at the spikes in the quarter-by-quarter metrics, you can see that we are mostly back to 2019, and we see good opportunities of furtherly reducing the number in the quarters to come. So things are moving, we think in the right direction in this sense. And return on capital employed, as I said, has been highly affected by the growth in the working capital base, enhancing the overall level of working capital absorption, driving the core of our net assets, total net assets or capital employed. Well, that's for the numbers, and let's close with the final remarks. First, let me draw your attention to a change in the shareholder structure. Maurizio Rota, the Chairman of Esprinet, and myself, we have grown to roughly 13% of the Esprinet share capital by buying more than 1.2 million shares in October. We believe that the group has a good future, with good growth prospects, and we have been buying shares since 2020, in a deep at EUR 4 of the share price in 2020. We moved from roughly 6% to more than 9%, and then we grew once more with other investments in this other dip of the shares. We also own personally some other shares, and we have also a shareholder agreement signed between Axopa, vehicle and Montinvest, the vehicle of the Monti family own -- which own more than 16% of the share capital of the company. So the long-term commitment is now made up of roughly 29% of the voting rights of the company, considering 2% of own shares in the market. And that's for the change in the shareholder structure that you might have witnessed with the communications we made in October. And as per our final remarks, we are navigating the headwinds of a highly uncertain environment. What we have achieved, gross profit margin growth, cost control initiatives, working capital improvement and hopefully, loss of market share stabilization, confirming our guidance. And all of this paving the way for future, especially the gross profit margin growth, paving the way for expected growth in terms of EBITDA margin in the future. Now that we are more and more positioned on higher-margin product lines. What about long term? Well, there's at last a forecasted recovery for our industry 2024, lower in H1, stronger in H2. Of course, everything influenced by geopolitical and economic instability. There's been a lot of changes in the market and they keep happening, but there are new interesting areas of growth: AI, cybersecurity, everything as a service, sustainability. The ICT is conquering adjacencies, energy efficiency, renewable -- renewable energy, electrical mobility. And based on these changes in the landscape, we are refining our strategic plan and will -- after the appointment of the new Board of Directors, after the AGM scheduled for April next year, we will bring it to your attention these new ideas and new plans and what we think will happen moving forward. Well, that's it for the presentation and the highlights on what we expect in the future. And now I turn -- go back to Giulia for the Q&A session.

Yes. Well, we can start with the Q&A session. [Operator Instructions] The first question comes from Mr. Storer.

Thanks for taking my 3 questions. The first one is a sort of bridge to year-end figures. And so which are the building blocks you are expecting for Q4. I would assume still higher gross margin, OpEx evolution and maybe revenues, because from your introduction, it seems that, I mean, revenues are probably holding better than in the 9 months, but still not necessary will be up year-on-year or stable in the latter part of the year. And related to that, maybe some insight on OpEx trend and G&A, you talked about a shift of resources from Esprinet to V-Valley, if you can elaborate a little bit more on that. Second question is on your business segment. We have seen a double-digit decline in Q3. Maybe if you can give us some insight on how the portion related to EU NextGeneration fund is doing in particular in Spain if political instability has brought some hiccups in the processes? And last question, a very quick one. You mentioned EUR 160 million factoring reduction in -- versus last year at the 9 months? Is this a stock level meaning that net financial position would have been EUR 160 million better at the 9 months? Or is a cumulative figure over the 9 months?

Well, the third one and easy one, it's the stock level, yes. If you take -- we always report on any given quarter, the level of factoring at closing of the quarter. So yes, if we had made more usage of factoring, we would have reduced the net financial position by another EUR 160 million, all things equal, meaning if we had used the same level of the previous year. But it's a stock level, it's just an elaboration on figures that are into our -- any given press release. If we go on Q4 results, well, it's still pretty challenging to see what will happen. Nevertheless, we expect still some softness on revenues. That's a real big question mark, that we have. What will happen on revenues. Different scenarios, everything is changing. As I said, in October, Italy has been pretty good, much better than in the last first 9 months. Spain kept on having [indiscernible] performance. November took off pretty well, both in Italy as well as in Spain. December last year was pretty weak. So hopefully, we should have for the first time this year, an easier year-on-year comparison. Remember, last year was a record year to date for us. And so revenue is the real question mark. In terms of our forecast, yes, we do expect further improvement in -- at gross profit margin quarterly -- quarter-on-quarter. And the G&A, we are working hard on improving our cost structure. We are undergoing reductions of headcounts, managers and more operational people, in this very moment. And basically, almost all of them are either in back office or in the Esprinet portion of our business. So the Screens, Devices and own brands area. Minor adjustments, really minor adjustments in the V-Valley division. So moving forward, we should enter 2024 with trim down cost structure, we have already stopped the substitution of people that left by normal attrition. And so the head count is progressively down. So there's a bunch of renegotiations that we successfully achieved on -- with the suppliers of services. And all in all, we do believe we are budgeting in this very moment 2024, so we're not yet out with any specific focus. But the idea, generally speaking, is that we should have a lower G&A next year in absolute terms. Part of them are a function of volumes, variable costs. So it will also depend on the top line growth that we've experienced next year. We do expect a better market and stabilization, if not improvement on our market share. Hence, we think next year, numbers should have a different, let's say, a different phase, but we're not yet there, all indications in terms of the market point in that direction. For your second question on Q3 decline in Spain and what about NexGenEU. Well, politically instability in Spain is indeed affecting the purchases of certain government bodies, less than what we might experience. It looks like Italy is in a worst the situation because of the level of bureaucracy that we are witnessing here in Italy against the better situation in terms of performance in Spain. They have certain constraints in terms of political decisions. But once they have decided that they execute towards here in Italy, even if the decisions are taken, then the execution is normally more difficult. Spain has been under pressure for us, mostly because of the higher level of consumer spending that we were addressing in Spain, against Italy, and a higher level of let's say, unsustainably low return on capital employed. The market has performed slightly better than Italy, but now it's getting worse. But again, more in the consumer segment apparently than in the commercial one. And that's for your questions. I hope I have addressed your topics.

A question comes from [ Mr. Berti ].

Thank you for your presentation. I would like to understand what kind of visibility do you have on the expected rebound of the market in 2024? And when we talk of a rebound, what kind of growth rate do you expect? I mean, you see mid-single-digit, double-digit. If you can elaborate on this for both the consumer products and for business solutions. And lastly, I would like to ask you, how is performing the newly acquired company, Sifar, following the integration of -- in the company.

So again, Sifar is doing pretty well. The integration is very mild, I would say, because they are doing a business which is pretty different from our historical ones. So they are kept separate, but they are doing fine in this moment, actually, more than fine. They're really very good numbers. And we're pretty happy with what's happening there. The idea now is to see if we can expand and export that business model in other regions of Europe, not only by export, which they always did, but also by bringing some of their expertise in our Spanish and Portuguese markets, where we already have good coverage of the market. But they are doing really well, and it's a great team of people. As per the evolution of the market, well, we have been having extensive discussions with vendors, with customers and market analysts. Consensus so far is all around the consumer-related market. And so retailers specifically that were tremendously, tremendously affected by both the reduction in the level of the disposable income followed by -- following the sharp increase in inflation and interest rates. But also by remit of the, let's say, share of wallet, between indoor spending and outdoor spending. During pandemic, consumers were almost exclusively spending indoor. And so we sold everything, even bake machines, bread-baking machines. Now people are simply flying or being at the restaurant or generally speaking, outdoor living. Now this mix is probably bouncing back to a more level situation. So that's the first point on which all analysts agree. There's also on -- consumers have been historically a driving force for certain product categories, smartphones, white goods, TVs, audio products in general. And there's a lot of refract that will happen as well. So all of this is pointing to a rebound in the order, let's say, of mid-single-digit in the Screens and Devices business, sustained by a good performance in the commercial segment, white-card possibly positive white-card could be an acceleration of NexGenEU funds utilizations. If we look at the Solution market, Solution market is more a questing mark. We're out of years of tremendous growth. Companies are keeping on their digitalization journey, governments as well. But of course, the backdrop is calling for, let's say, cautious -- cautiousness. And so we and the investors are sort of bouncing different views. On one side innovation, generative AI, cybersecurity, digitalization, and software, should still be very, very healthy drivers of growth. But on the other side, there's also a very, very challenging comparison year-on-year. Again, we have been on a trajectory of tremendous growth in this product category for 2, close to 3 years in a row. So that there's this point and on Service, storage, there are question marks about the willingness of many companies to keep on investing at the same pace, and especially doing the refresh at the same base. So over there, we tend to think that there should be another good year in terms of solutions but probably with the market -- with slightly less growth than before. So those are the assumptions behind the evolution of the market.

A question from Mr. Storer.

Thank you for taking my second question. You, Alessandro, you talked about the impact of factoring, which, if I understand well, was 30 bps in the 9 months negative on gross margin. The other factor, which have been inflating over the past periods impacting gross margin is transportation. Was the contribution of transportation still negative in the 9 months this year? Or there you have seen some of this inflation kind of improving the gross margin?

Well, on freight -- net freight year-on-year in terms of weight on revenues was down for us. So we improved it but we improved it for, let's say, one key reason we were able to charge more to our customers, it was down 6 basis points. So the gross profit margins, as you see it was favorably impacted by 6 basis points before -- because of better freight forward charges, net charges and was negatively impacted by roughly 30 basis points because of higher factory costs. So all in all, we could have had probably another 23, 24 bps of higher gross profit margin in the 9 months. If we had not been into this tornado of inflation and interest rates. All this said, what we see moving forward is, especially in Italy, we do expect that there will be probably further pressure on freight costs, not so much because of fuel, but mostly because of the impact of renegotiations ongoing in many freight forwarders, of the rates paid by them to the employees. Those -- not so much -- those on the vans, on the lorries but those that in their warehouses are preparing the goods to be shipped. So there might be some pressure over there, and we are already signaling our customers that if this further round of inflation will kick in, we will have to exert a further pressure downstream, that's it. But it should hopefully not be a major, major impact.

Okay. There are no more questions, so we can end the call. Thank you for participating. And of course, we remain at your disposal. Thanks again, and see you next time.

Thanks, everybody. Bye.