Gestamp Automoción, S.A. (GEST) Earnings Call Transcript & Summary

Good afternoon, and thank you very much all of you for taking the time to attend Gestamp Full Year 2023 Results Presentation, it is probably a very busy afternoon for you. I am Ana Fuentes, IR Director. And before proceeding, let me refer you to the disclaimer on Slide #2 of this presentation that has been posted on our website and that will set out the legal framework under which this presentation must be considered. The conference call will be led by our Executive Chairman, Francisco Riberas; and our CFO, Mr. Ignacio Mosquera. And at the end of the conference, we will open up for a Q&A session. Now please let me turn the call to our Executive Chairman, Mr. Riberas.

Okay. So good afternoon, and thanks for attending this call in which we will be presenting the 2023 results of our group. 2023 has been, for us, another record year in terms of revenues and also in terms of our main financial parameters, while at the same time, we have been able to boost our financial profile with a very sound free cash flow generation and also being able to reduce our debt and to improve our leverage. So by doing that, I think it's been 2023, one step ahead in order to reinforce our position of partner supplier to our customers. Moving to Slide 5. I would say that following the problems of '20 and '21, Gestamp has had 2 consecutive record years in '22 and '23 in terms of growth and earnings; much better, '23 than in 2017, the year of the IPO when 95 million light vehicles were produced versus EUR 90 million this year and also better than 2019 with a similar amount of vehicle manufactured. So in fact, and just as a figure, our sales per vehicle manufactured globally has moved from EUR 86 million in 2017 to EUR 140 million in 2023. In terms of the market, what we have seen is the light vehicle manufacturing has grown much more than expected by the market in the beginning of the year. We were all expecting an increase of 3.5% in our footprint. And the final growth has been more than 10%. And out of this additional 5 million vehicles, more than 2/3 have been built in Asia. So -- but coming back into Slide 7, after 2023 volumes, however, already at a similar level of 2019 pre-COVID, it is important to mention that in this period from '19 to 2023, our auto business in terms of revenue growth and without the impact of raw materials has grown by 16%. We have been able also to improve the profitability of our Auto business from an EBITDA margin of 11.8% to 12.6%. We have been able to generate a very sound free cash flow of more than EUR 200 million since 2020, more than EUR 1 billion accumulated in the period. And also, we have been able to improve our leverage, moving from 2.5x debt to EBITDA in 2019 to 1.5x right now. So in terms of the guidance, I think clearly, we have been able to have a good performance in 2023. In terms of revenues, we have obtained a double-digit reported revenue growth, an increase of 14.4% year-on-year with our auto business doing an outperformance of 6.4% and Gescrap contribution to this revenue growth of 5.7% year-on-year. In terms of EBITDA, we have also had a double-digit reported EBITDA growth. That means 13.4% year-on-year increase, with the auto business EBITDA margin at the level of 12.6% and Gescrap with an EBITDA margin of 7.4%, CapEx of 7.7% over reported revenues but excluding the impact of FX, it would have represented 7.4% as guided, with a free cash flow of EUR 207 million. In terms of our market outperformance in 2023, I would say that excluding the impact of lower pricing in raw materials and also at FX constant we have been able to outperform the market by 6.4 percentage points, a very sound outperformance in Asia, in Mercosur and also in East Europe, we have level very similar to the market if we exclude the impact of raw materials in the case of Western Europe and a little bit less than the growth in NAFTA because we have less exposure to our American customers. We have solid organic growth during the 2023 period. In this bridge chart that we see here, we have seen that we have -- our reported revenue has moved from EUR 10,726 million to EUR 12,274 million, and that has been driven by the very solid organic growth of EUR 1,579 million, also a contribution by Gescrap incorporation to the perimeter of EUR 608 million and is being offset in some extent for raw materials, but also for the impact of orders for ForEx from currencies like the operations in China, Argentina, Turkey, and also U.S. As mentioned in our Capital Market Day, EV is a very important lever of our growth strategy, and we have been able to do very well in this market during 2023. In fact, if we consider the market itself, EV manufacturing in 2022 represented 14% of total manufacturing in that year. And in 2023, this increase has moved to 17%. But in the case of Gestamp, our sales related to EVs in 2022, were 14% of our sales. And in 2023, we have been able to move this to 20% of our sales. And that has been driven by our good positioning towards the EVs with our technology and different kind of innovation. In the Slide #12, we are addressing here the problems in NAFTA in our auto business, which our auto business in '23 performance has been dragged down by our NAFTA operations. In revenues, for instance, we see that in terms of our total auto revenues, we have been able to grow by 16.6%. But if we exclude our NAFTA operations, the growth of our revenues in the auto business in the rest of the world has increased by 19.9%, representing an outperformance of 9.2%. But even more important in terms of profitability, our EBITDA has moved from EUR 1,208 million to EUR 1,325 million. So that means an EBITDA margin of 12.6% for our auto business, but we will exclude the low return in our NAFTA operations of last year of 7.3%, we could have been able to have an EBITDA excluding raw material for the rest of the world of 14%. So what we see is a huge potential for us. As you know, EBITDA is not impacted by raw materials due to pass-through process. For the full year 2023, we have reached revenues of EUR 12.274 billion, which entails a double-digit growth of 14.4% when compared to the EUR 10.726 billion from 2022. Revenues for the auto business, excluding Gescrap and raw material impact at FX constant have grown by more than 17% year-on-year in year '23. In terms of EBITDA, we have generated EUR 1,371 million in 2023, meaning an 11.2% margin or a 12.3% EBITDA margin if we exclude the impact from raw materials. As Paco has mentioned earlier, our profitability this year has been dragged down by our NAFTA business. Reported EBIT has grown by 26.1% year-on-year to EUR 680 million with an EBIT margin of 5.5% or 6.1% excluding the raw materials impact. This significant improvement is partially thanks to our disciplined CapEx policy. Net income in 2023 has been EUR 281 million. That compares to the EUR 260 million reported in 2022. And net debt has decreased by almost EUR 90 million to EUR 2.058 billion as we will later detail. Moving on to Slide 16. We can see the performance by region on a year-on-year basis. Looking at each region in detail. Revenues in Western Europe have grown by around 9% year-on-year in 2023 to almost EUR 4.7 billion. Performance in the region is negatively impacted by raw materials. It is worth highlighting the strong momentum in Germany, France and U.K. over 2023. In terms of EBITDA, it reached EUR 540 million, which represents an increase of 18% year-on-year. As a result, EBITDA margin stood at 11.6% in the period, improving by almost 100 bps year-on-year despite inflationary pressures. This performance reflects an improved operational leverage. Furthermore, as mentioned earlier, we have been flat with the market, excluding raw materials with regards to our outperformance. In Eastern Europe, the performance in the year has been solid despite the market circumstances, proving again our strong position in the region, particularly in markets such as Poland, Slovakia or Czech Republic. On a reported basis, during 2023, revenues and EBITDA have grown by around 7% year-on-year to EUR 1.713 billion and EUR 248 million, respectively, with an EBITDA margin of 14.1%, flat year-on-year. In NAFTA, not much to add to what Paco has previously explained. We see this region as a strong opportunity despite we continue to be negatively impacted by our client and project mix and limited profitability in some specific contracts. Our revenues have grown by around 6% year-on-year while EBITDA has decreased by 15%, leading to an EBITDA margin of 6.7%. As explained during our Capital Markets Day in June, and as Paco will go through more in-depth later, we remain focused on turning around the region through a plan to improve our market positioning and profitability in NAFTA over the coming years. In Mercosur, revenues for the full year 2023 have increased by almost 4% to close to EUR 900 million. Revenue growth has strongly decelerated in the fourth quarter due to the extraordinary devaluation of the Argentinian peso. EBITDA in the period has remained flattish year-on-year at EUR 105 million with EBITDA margin slightly deteriorating versus last year, but still at healthy levels of 11.7%. In Asia, our performance continues to benefit from our strategy to grow in EV, mainly in China, and we continue to see this market as an opportunity for us. In 2023, revenues in this region have seen the strongest growth at 15% and have reached EUR 1.9 billion with a strong market outperformance explained by our EV products. As a result EBITDA grew by almost 23% in the period with EBITDA margin improving to 14%. Finally, Gescrap has contributed with EUR 626 million to our 2023 reported revenues and a EUR 46 million EBITDA, which implies a 7.4% margin. The performance of this business in the year has been negatively impacted by the general fall in metal prices. Overall, we have seen a solid performance in the period driven by strong organic growth despite the negative impact from ForEx and an EBITDA margin excluding raw materials at 12.3%. In fact, our auto business has reached an EBITDA margin of 12.6%, excluding raw materials, in line with the 12.5% to 13% EBITDA margin target we guided at the beginning of the year. Turning to Slide 17. We see we have generated a strong free cash flow in the year, meeting our guidance of generating more than EUR 200 million in 2023. We have closed 2023 with a net debt of EUR 2.058 billion, which is EUR 87 million below the EUR 2.145 billion net debt reported as of December 2022. Excluding dividend payments and acquisitions, including those in China, Morocco and Mitsui, we have generated EUR 207 million, thanks to the strong revenue and EBITDA growth in the period and a strong working capital management. Within the strategy of acquiring minority stakes that we initiated in 2021, this year, we have acquired stakes in Morocco, China, Argentina and the U.S. These last 2 have been to Mitsui. During this year, we have invested EUR 950 million of CapEx, including growth and replacement. These investments will allow us to preserve our growth profile be at the vanguard in technology and innovation while leveraging on the EV transition. As we move into Slide 18, we see that we continue focused in reinforcing our balance sheet profile and deleveraging. We have ended 2023 with a net debt of EUR 2.058 billion, which implies a net debt-to-EBITDA ratio of 1.5x. This is the lowest leverage ratio we have had since the IPO and in fact we have already met our Capital Markets Day targets of being within the range of 1 to 1.5x net debt to EBITDA through 2027. If we look at debt in absolute terms, we see that we are succeeding in our debt reduction strategy as we have reported the lowest gross debt figure since the IFRS 16 implementation. Turning to Slide 19. We present our latest business KPI that we introduced in our Capital Markets Day in June, the return on capital employed. As we have made clear, our 2027 strategy is focused on generating value for our shareholders, making sure that we invest on profitable growth. Our return on capital employed in 2023 has improved by 390 bps year-on-year to 17.9%, mostly driven by EBIT growth and selective CapEx to ensure an accretive growth profile. It is worth noting that a part of this improvement is related to growth CapEx of projects that have not yet started and are reflected in our balance sheet. We should expect potentially some short-term dilution, but with no impact in the long run. Thank you all. And now I hand over the presentation to Paco for the outlook and after review, closing remarks.

Thanks, [ Nacho ]. And looking at 2024, in terms of the market, what we see in 2024 to be a transition year, we are expecting more or less to be the manufacturing of vehicles of around 90 million units. And this market to be -- keep on growing from '24 to 2027 at a level of around 1.7% in terms of CAGR. In 2024, this is going to be some limited growth in Asia and NAFTA and not the growth in Europe and Mercosur is expected right now. And moving to the next slide. I think it's important that even if we see some volatility in the short term around EV growth, what is clear is for the future, EV is going to be the most important lever in order to go towards a model of sustainable mobility. For 2024, we are expecting a growth in terms of manufacturing of EVs of 30% and also an increase up in 2027 of around 25% in the CAGR until 2027. And by 2027, probably more than 40% of the paces manufactured at a global basis will be already EVs. So clearly, it's going to be a different level of penetration in the market, probably being the most important and relevant market for EVs in China and Western Europe. If we move to Slide 24. This year has been quite important for us because we have made a strong commercial effort in order to be able to get -- receive nominations for more than 100 new projects. So this is a record order intake for us, and we have been able to reinforce our backlog. This backlog now represent EUR 56.6 billion and is covering basically 92% of our revenues expected from 2024 to 2028. So clearly, we have with this a very good visibility in order to be able to reinforce our growth profile. So moving to the next slide, our focus in terms of 2024. Of course, it's going to be to preserve our growth profile, of course, mitigating any potential EV volatility with more volumes in combustion vehicles, of course, trying to keep on investing heavily in technology and innovation to be always at the vanguard and also with a clear and disciplined CapEx in order to be able to capture the growth in the future, but also not only preserving growth but also ensuring profitability, we'll put a lot of effort in increasing our efficiency and productivity of our operations. Of course, also enhancing the flexibility in order to be able to react quickly to any demand fluctuations and also to be very much focused in successful launches of different programs. But of course, the key element for this year is going to be the NAFTA Phoenix Plan that I'm going to talk about later. So the guidance for 2024 means that for our Auto business, we are expecting outperformance in the low single-digit range. And for Gescrap, we are expecting similar revenues to the ones in 2023. In the case of the EBITDA margin for the Auto business, we are assuming a flat-to-a-slight increase in reported basis and Gescrap with a similar EBITDA margin to 2023. We are expecting also a positive free cash flow generation in the range of EUR 200 million and preserving our leverage means inside the range that was communicated in the Capital Market Day between 1x and 1.5x net debt to EBITDA. So with this now, we move to the Phoenix. The NAFTA 360 degrees plan, a plan that of course, is built in order to be able to improve the efficiency of our operations in North America. Operations in North America, of course, started many years ago. And before 2025, we have the very good established business. It's true that from '16 to '18, we started at an expansion phase and we had problems at that time. We were able to correct part of these problems before the COVID in 2018 and 2019, but the reality is that from 2020 to now, we have had very bad performance in our operations in NAFTA, basically not being able to offset the problems of inflation, efficiency and other problems of the North American market. If we go to the -- if we have it clear in the next slide, we can see that we have failed since 2019 to improve the profitability of our North American operations. In '19 -- in 2019, in terms of revenue, so we had a little bit slightly below EUR 2 billion in terms of sales. We have been able to grow our sales of our operations in U.S. and Mexico by 25%, reaching close to EUR 2.5 billion. But if we refer to profitability, in 2019, we obtained an EBITDA of EUR 220 million, representing an EBITDA margin of 11.2%. And in 2023, last year, we had a margin of 6.7% with EUR 166 million due to operational issues and inflation and that now we will go through that. In terms of examples, in the next slide, we can talk about some clear KPIs in order to see what are the differences between our operations in the NAFTA in 2023 and the operations in the rest of the world. If we refer to a strokes-per-shift, for instance, we have roughly 30% less strokes-per-shift in NAFTA than the similar facilities in the rest of the world. If we refer Labex-to-sales ratio, in NAFTA, we have 20% Labex and we have 16.4% in rest of the operations. If we refer to the Voluntary Turnover Rate, in NAFTA during 2023 has been 26.4%, while in rest of the world, it's been 11%, and if we refer to quality related cost to sales, it's been 3x more in NAFTA than in the rest of the world of operations. So moving to the next slide. Of course, the NAFTA performance has caused our margin to be below the expected ones. So that means that without the impact of the low profitability of our NAFTA operations, we could have been able to obtain a 12.6% EBITDA margin. And as we reported this year, we have generated 11.4%. So we have missed 120 basis points just because of the low profitability of our operations. The Phoenix plan is a comprehensive plan focused in enhancing the efficiency of our operations. But it's also a plan that is planning to reinforce our purchasing capacity in order to be able to improve our costs and our CapEx. It's also a plan where we are focusing on our people, trying to rebuild a Gestamp culture, but in the American way. And of course, also trying to address inflation and volume fluctuations in a fair partnership with our customers. But focusing, of course, in our operations right now, what we try is to identify the most important problems in our plants. Out of our 15 facilities in North America we have already 9 facilities with an EBITDA margin of 10%. Of course, some of them are doing quite well. But in the rest -- in lot of them, we will keep on improving, trying to bring our excellence strategy, all this reputative Business as usual. But we are, of course, developing and thinking about to execute our restructuring plan in the all 6 facilities. In fact, moving to the next slide. The idea is that 3 of these plants, we have already identified expert plant from our operations basically in Europe, and these plants are already working together with the management of the U.S. plants trying to support and trying to send all the knowledge and trying to be able to explain all 0the best practices we have in our best plants in the world in order to be able to improve operations in a sustainable way. But there are other 3 plants where we are planning to do a little bit more in-depth restructuring. And this in-depth restructuring, if we move to the next slide, there could be, for instance, to delocalize one of our facilities in U.S., which is not doing well. And in this case, logistic cost is allowing us to do that. And in other way this is one of our plants in the south of U.S., whether we could be able to completely change the kind of work that we have right now or even to consider a kind of an organized facility closure. This plan has a clear governance. This Phoenix project is supported by the whole Gestamp organization. And of course, in the next year, it's going to be a priority for all of us and this priority is going to be represented because the successful execution of the Phoenix plan is going to be a key lever of Gestamp remuneration at the labor group. And of course, all these governance of this Phoenix plan is going to base in clear responsibilities and objectives and targets and is going to have a dedicated team sponsored by Gestamp top management from everybody in Gestamp. The cost, of course, of this project is going to be relevant. If we think about what is going to be the cost in terms of Labex and OpEx, it's going to be representing roughly around EUR 60 million, costs related to experts, to hiring more people even through the outsourcing of the current capacity of some of our facilities in U.S. in order to be able to improve these facilities. And also it's going to have a CapEx associated with this of around EUR 39 million basically by trying to upgrade parts of the assets that we have right now running with some problems. And moving to the clear numbers. Our target here is to increase our EBITDA margin from 6.7% in 2023 to more than 10% in 2026. So that means a part of this improvement is going to come from the improvement of the margin mix and the volume coming out from the new programs. And another important part of it is going to come from the impact of the Phoenix plan in operations in our conversations with our customers and also in purchasing. With that, we should be able to offset the impact of inflation, of course, and it is going to be able to position ourselves to be able to get an EBITDA margin from 11% to 13% by 2027. So to end up this explanation of the Phoenix plan, Clearly, NAFTA is a very important region for us. It's the second largest important, and we need to improve our operations in NAFTA. We have now a clear strategy plan to upgrade NAFTA to the Gestamp's standards, and we have clearly identified a number of facilities with two different degrees of intervention. And our idea, of course, is trying to be able to get all these targets in order to be able to really fulfill all the targets that we have for our 2027 ambitions. So just to end up, 1 remark around our ESG plan. 2023 has been a critical year for us because we have been able to start with our new plan. This plan in terms of our environmental commitments. Now we have clearly set the dates for our neutrality in Scope 2 by 2023 in scope 1 and 2 by 2045 and we are complete climate neutral by 2050. And also, we have been able to start using the new tool of Gescrap to go in the direction of this material decarbonization. We have signed during this year, very important agreements with major steel suppliers in order to be able to use our Gescrap in order to be able to produce recycled steel with a kind of low CO2 emissions steel. So this is a very important role of Gescrap for the future of our strategy. And 2024, of course, is going to be key year for us. It's going to be a key year for us. It's going to -- we are going to keep on working on trying to build in our strategic pillars for 2027 in order to be able to meet our midterm target as committed in the Capital Markets Day last June and consolidating our status as a partner supplier. So just to end up, I will say that we have record results achieved in 2023. Of course, we see 2024 a transition year where we are going to focus as a group in the implementation of the Phoenix plan in order to ensure that we consolidate this status as partner suppliers. Okay. And with this now, we are open to your questions.

[Operator Instructions] The first question comes from Paco Ruiz from Exane BNP.

I have 3 questions, if I may. The first one is on the delay we have seen in the EV production in the second half of last year and probably will continue at least for several quarters. Could you give us an idea what could be the impact on your revenue during 2024? The second question is, just to clarify, if all the cost of the Phoenix plan are already included in your guidance. So mainly we can infer that your free cash flow is going to be EUR 60 million higher on the target that you had for 2023? I mean, assuming the EUR 200 million that you have guided? And the third is following the acquisition of minorities that you have done in the U.S., could you tell us if you have any other [indiscernible] options that will be exercised in the coming months in this respect?

Okay. Thank you for your questions. I will refer to the first question around the EVs. It's true that we have seen some delay and some problems in EVs in the second half of the year. It's true that this has happened basically in some extent, a lot have noise in Europe. But not in China, for instance, in China, the sales and the manufacturing of the EVs has been running quite well during the second half and rest of the year. And it's true that there's been some delay. We see our customers committed to the launch of the new EVs but it's true that in some cases, due to some technical ideas, there is some delays in this implementation. So for us, it's not such a big impact for instance in Europe because as far as there is some delay in the EVs, we could be able to keep on producing and delivering on the ICE vehicles. So it's not such a big impact. But of course, we are monitoring this very closely in order to be able to react. But so far, we see the plans of our customers moving forward, and we don't see any change in the commitment and the investments that they are doing for EVs in the future is remaining impacted. So maybe with the cost of Phoenix?

Yes. Sure. Paco, thank you for your question. And as we referred to -- in the slide of guidance actually in the presentation, we are going to be -- the guidance is excluding any extraordinary impact. So it actually excludes the impact of Phoenix of EUR 60 million in the course of 2024 between CapEx, OpEx and Labex.

And not in -- in margin also?

Margin also, yes. And on your third question around any further options to be exercised during 2024. At this stage, there is nothing on the table. But as you know, this is a strategy that we've been pursuing since 2021 of reducing the minorities, and we cannot overrule that something could happen in 2024. But so far, there is nothing on the table.

The next question comes from Akshat Kacker from JPMorgan.

Akshat from JPMorgan, 3 questions from my side as well, please. The first one on single digits, low single-digit outperformance on the good drivers. Could you just share more details in terms of what regions guide growth for Gestamp in 2024? And also on the revenue line in terms of different moving parts, could you talk about your assumption on the impact of raw materials on the top line, please? That's the first question. The second question is on free cash flow. Could you just discuss your expectations on total CapEx spend for 2024 and including the restructuring one-offs in CapEx as well. Is it fair to say that absolute CapEx should be now peaking for Gestamp in 2024? And the last one is on the Phoenix restructuring plan, and the target to a 10% EBITDA margins by 2026. So should we think about the margin profile as declining in 2024 and then more of a straight line improvement to 2026? Or is it more of a back-end loaded development in that region, please?

Okay. Thank you for your questions. I can take the first and the third one, if you want, [ Nacho ]. So of course, in terms of growth, we are expecting this year to have a limited outperformance compared with the market. So that means that probably we're going to be in a kind of growth rate of around 2%, 3%. That is what we are guiding. To be honest, we are going to grow in all the different regions. We have now a good position in China. In fact, last year, we were able to outperform the market clearly in China. And this year also, we are expecting to do so. And also, we are expecting to -- also to be able to outperform in all the different regions with the different customers. In terms of what could be the impact of raw materials, we are expecting, especially in Europe and some slight decrease on the price of the steel is not going to be relevant what we are expecting. And of course, still the steel prices will be at a higher level of the ones that we had in 2019 or 2020. In terms of the Phoenix program, what we are intending that we have guided this margin of EBITDA of 10% by 2016. It's true that the most important part of the cost associated with OpEx and Labex is going to happen by 2024. Also in terms of CapEx, we will try to do as much as possible in the beginning in order to be able to take full advantages of all this in the years to come. We are not providing you what is going to be the increase from the [ 6.7% ] to the 10%. But we feel quite comfortable that we have margins in order to be able to exceed this 10% margin of EBITDA by 2026.

And with regards to free cash flow and CapEx, basically, I'd like to refer to our statement of our Capital Markets Day where we said that we would be having -- ending at -- between 1 and 1.5x net debt to EBITDA and free cash flow positive every year. In this case, what we have guided is for EUR 200 million free cash flow. And we will be doing investments during the year, which will be focused on following our clients in their transition to EV and also basically on focusing on profitable growth and accretive growth in terms of return on capital employed. So we are not going to be providing guidance on CapEx for the year.

[Operator Instructions] The next question comes from Alvaro Lenze from Alantra Equities.

The first one is on 2024 guidance. You are guiding again for EUR 200 million free cash flow in 2023, you have delivered. But I would highlight that you have generated more than EUR 160 million from working capital. So I was wondering just how sustainable is to continue to receive financing from working capital? I don't know if this is just a structural change in your business that the company is now [ finally ] seeing its growth via working capital? Or it is has been more of a one-off of improving the working capital situation of the group? My second question would be on the Phoenix plan? And how could you relocate capacity into Mexico? I don't know if your clients would move as well to Mexico or if you can export from Mexico to the U.S., the parts that you manufacture? And the last question would be regarding China. You have mentioned that you have improved your market share. You have outgrown the market in China. I would like to know what's the mix there? I don't know if it's with Western OEMs? Or is it that you are gaining market share with local OEMs? And then also, how do you see the EV market going forward into the mid and long term, how Chinese OEMs can play out and take market share from Western OEMs? And how could that impact Gestamp in the medium and long term?

I'll take the first one. With regards to working capital, I think that we have had an efficient working capital management in 2023. But you also need to take into account that we have had an extraordinary working capital this year due to the increase of raw materials. And obviously, the pass-through clauses that we have to our plans and then and/or basically our receivables. There is still room for improvement actually in our working capital going forward. We don't see actually a deterioration of that. And if you think in the terms of number of the volumes of factoring that we have done over our sales, this has been lower in 2023 than in 2022. So basically, I think that, yes, part of our cash flow has been generated through working capital, but also, it has been very well generated by our EBITDA of a strong management of our financing expense and basically a disciplined CapEx investments.

Okay. So referring to the Phoenix plan, it's true that we have added here in the plan, the decision to move the capacity work of our plants in U.S. to Mexico. I don't want to provide more details on that right now. But it's important to mention that in this case, we are moving the facilities. We are -- the kind of facility that we have are not really heavy, let's say, and the kind of products that we are moving to Mexico in terms of logistics costs are not very relevant. So that's why we have studied that, and we see that it's going to be a very, very short payout of this transferring of this production from U.S. to Mexico because of the logistic cost, we cannot do that with most of our products because logistics costs are quite relevant. In terms of China, last year we did a very good outperforming of the market. And this year also, we are expecting to do so. This outperformance has come from our sales through EVs. And we have done the sales not just for pure EV players, but also for general players and not only for foreign but also for Chinese. So we have made a very important growth, for instance, for some EV player, which is not a Chinese. And then also, we have increased a lot our cooperation with the Chinese players, especially around products that are much more related to EVs like; for instance, in the area of the [ Door Ring ]. In terms of what is going to happen with the EVs and China. Of course, right now, it's true that in China, there is some kind of advantage today in what is referred to EVs. And it's true that we have seen a limited impact coming out from imports from China. But as far as the logistic cost to sell vehicles from China to rest of the world, these are very relevant. But we could see maybe in the future is that we can have some of these OEMs in China with opening plants in other areas in the world. For us, it's more an opportunity rather than a risk because we are already working with them in China. So there is not a concern. But of course, right now, it's a moment of time that everybody is getting a little bit nervous.

[Operator Instructions] Ladies and gentlemen, there are no further questions. Dear speakers, back to you.

We wanted to apologize because I think we've been having some operational issues for those who are listening to the webcast. So if you have any further questions, the IR team remains at your disposal, okay. So thanks very much for making the time to join us today. Have a good evening.

Thank you. Good day.

Thank you.