Harvia Oyj ($HARVIA)

Hello, everyone, and welcome to Harvia's Quarter 1 '26 Earnings Webcast. My name is Matias Jarnefelt. I'm the CEO of the company. And with me, I have Ari Vesterinen, our Chief Financial Officer.

Hello.

We will run today's session as follows. I will start presenting by going through the highlights of the quarter 1 business results, financial performance and also steps we are taking to implement our strategy and build Harvia's future. After that, Ari will go through the financial numbers in more details. After which, we are ready for your questions. And as usual, you can submit your questions in the chat box in this webcast window. So let's get going. Quarter 1 '26 was a good quarter for Harvia. Our revenue increased by 12.7% to EUR 58.6 million, and that represents our all-time high in terms of revenue so far. All growth was organic and revenue grew by 18.3% at comparable exchange rates. We grew in all of our 4 regions that we report and particularly strong performance in euros was in APAC and Middle East and Africa and Northern Europe. Dollar depreciated a lot versus quarter 1 last year, around 10%, and that negatively impacted our reported sales that we report in euros. In local currencies, North America grew by over 20%. During the quarter, we delivered also solid profitability by delivering adjusted operating profit of EUR 12.9 million and that represents exactly 22% of our revenue. Profitability was supported by strong revenue growth, which outpaced the increase of our operating expenses and also by solid gross margin management that was supported by the actions that we have taken during the last year and also during the quarter to offset the impact of the tariffs and also currency fluctuations that have been quite significant during the past 12 months. We have also taken steps forward to implement our strategy and build Harvia's future. That includes systematic investments, for example, in capacity. We have ongoing activities in our Lewisburg factory in West Virginia to expand the capacity as we then start to prepare for the high selling season of the latter part of this year again. We are investing in product development to make sure that we have exciting innovation to bring to the market. And this includes also that we are building and strengthening our IT infrastructure and business processes. And the purpose is to improve productivity, scalability and operational resilience as we keep growing this business. As a part of this development process, the Muurame factory, which is our main heater manufacturing facility in Central Finland, will go live with the new operational IT system during the ongoing quarter, so quarter 2. And this transition to the new systems and processes is expected to temporarily extend delivery lead times and shift approximately EUR 3 million to EUR 5 million worth of deliveries from quarter 2 to quarter 3. Also, there will be some temporary operational expenses from this upgrade process that will be visible in our quarter 2 figures. All in all, Harvia is very well placed to continue to lead and shape the global and growing sauna market. So summarizing the key figures from quarter 1. Revenue, EUR 58.6 million, and that represents 12.7% growth at comparable exchange rates, as already mentioned, 18.3%, and all of this growth was organic. Adjusted operating profit of EUR 12.9 million, and that's 22% of our revenue, and that represents operating profit growth of around 8% from the comparison quarter. Healthy operating free cash flow at EUR 12 million, and that's 80% cash conversion. We delivered growth throughout the world across all of our reported geographical regions. And out of our 4 reported regions, 3 grew by double-digit. The largest absolute contribution came from region North America that grew by 12% in euros and over 20% in local currencies. And also Northern Europe contributed significantly by growing EUR 2 million over last year's figures. APAC and EMEA continued strong double-digit growth at growing nearly 30% and Continental Europe continued to deliver rather modest, but steady growth figures. Then I will go through each of the regions briefly. So Northern Europe now represents 24% of our total revenue and revenue increased by nearly 17%. Why is this happening? I think one of the explanation comes from looking at the baseline. So we have had rather difficult 3 years in the region, and we believe that this has caused building up of pent-up demand in the region, which is now starting to turn into a real order flow. In addition to that, we've been working systematically to build our commercial access in the region, and that includes finding and building new channel partnerships. And one of the examples is a very successful channel expansion that we've been able to build in Sweden. In Continental Europe, the progress is steadier, but still rather modest with 6% growth over last year. And Continental Europe represents now 26% of our revenue. We see quite significant differences when we look at the countries inside the region. This time, the strongest performance was in Germany and the United Kingdom, while in some of the Western European countries like France, we saw slower development. When we look at our product portfolio and brands, we can see that EOS, which is our high-end brand for commercial use and also premium use in homes, performed particularly well. Then to North America, which I'm sure interests you a lot. So essentially good growth continued. We grew by 12% in euros, and that's over 20% in local currencies. And just a remark that in North America, we have 2 currencies that we use. One is U.S. dollar and we have also business in Canada where we sell in Canadian dollars. Now when you look at the baseline, you can see that we had very steep baseline to beat now this time. We grew by nearly 60% in quarter 1 '25. And in addition to that, we had to work against depreciated dollar. And despite that, reported growth was 12%. Where did this growth come from? First of all, we had very strong performance in our heating equipment business, which is the traditional core of Harvia. And we were able to fight a very, very high baseline in our sauna cabin business from last year. We had some weakness in the steam business, particularly, there was 2 reasons. One is the dollar. And in local currencies, steam performance was rather flattish, but below our expectations. That was impacted by some slowness in certain key accounts for the steam products. But then again, it's also rather small product category, so quite small differences in absolute orders have quite significant impact on the percentage. APAC and EMEA, continued strong growth at growing nearly 30% and now representing 8% of our revenue. The growth was coming in particular from the big countries in the region that we are systematically building for the future, and that's China and Japan. Of course, in this region, we have also the Gulf region. However, Gulf region represents only around 2% of Harvia Group's total revenue. We saw a slight decline in revenue in the Gulf region during quarter 1. But as I said, in the big picture, it didn't have a material impact. So then briefly looking at the kind of product portfolio, strongest performance in heating equipment that grew significantly, now representing 57% of revenue. Saunas and Scandinavian hot tubs 22%, steam 7%, accessories and heater stones 6%, spare parts and services 7%. And here, we have the growth bridge. And as you can see, clearly, the biggest contribution to our absolute growth came from heating equipment. The demand for our products has been very solid across the world. In saunas and Scandinavian hot tubs, as mentioned, dollar was a significant factor as saunas and Scandinavian hot tubs mainly revenue comes from United States. We also had very high baseline to beat. Steam product has similar currency effect since steam products we practically sell in the United States and Middle East, where dollar is the currency we use in both of those cases. And as mentioned, there was some softness in orders from certain key accounts in the United States. So what about the strategy? The strategic positioning of Harvia is that we are a global leader in growing market that has very strong fundamental growth drivers that we believe will be helping us for many years to come. In this business, we want to have an offensive strategy where we shape and lead this market. And we want to do that by excelling in 4 areas: one, answering the question what, which relates to our products and portfolio leadership; where, which answers the questions which are the countries where we focus most, so countries that matter the most for the future of this business; to whom relates to our commercial execution, so in which channels we play with which brands; and how relates to our operational excellence and competence development. And we've been systematically working on our strategy again also during this quarter. And I'm very happy to report that when we look at, for example, the performance that we have had in the heating equipment part of our business, there is significant contribution from the new products we've been introducing to the market, for example, during last year. And one particular product to mention would be Harvia Phoenix, which is a full touch control panel optimized for sauna use and in really sweet price point for the market. Also, EOS-branded premium and professional products have been performing very well. When we look at the geographies, of course, we are glad to see that despite lower consumer confidence in North America compared to many years before '25, we've continued to see strong demand from the end users to our category. This is a story of pleasant relaxing wellness that improves your physical well-being and also mental well-being is something that really resonates very well across the world, but also particularly in North America. In APAC and Middle East, we're very happy to see that the markets where we focus on keep delivering results. So China and Japan, where we have quite significant own presence are leading growth countries in that region, providing significant future growth opportunities. Continental Europe, rather steady progress, but positive progress. And maybe jumping to the leading in key channels. One of the things we're now doing in Continental Europe is bringing direct-to-consumer online store by Harvia to certain selected Continental European markets to inspire the market and also replicate a very successful business model that has been helping us for many years already now in North America, so D2C easy-to-buy products. And in Northern Europe, this was now the third double-digit consecutive quarter, starting from quarter 3 last year at 14%, 11% in quarter 4 last year and now this nearly 17%. And best-in-class operations, great people, of course, is the foundation. We've been continuing the investments, building and expanding our facilities in Lewisburg, West Virginia as an example. And I will be talking in a couple of slides from here a bit about the IT infrastructure process. So this is an example of basically doing more of what works. So in a simple terms, if you think about strategy, replicate success cases and then change things that don't work. And one of the things that really has been very good for us is our own direct-to-consumer online stores where we sell easy-to-buy, easy-to-install products, beautiful products that fit very nicely in your homes or in your backyard that are also very easy to install. So we now are replicating the business model in now Germany and Austria with the intention that we will be also rolling this to new countries in Continental Europe in the coming months and years. And then let's talk a bit about the IT infrastructure and business process -- project that we have ongoing. First of all, why are we doing this? The reason is simple, Harvia is a global leader in significant growing market. And we believe that we can grow Harvia significantly in the coming years. That means that we have to have IT systems and processes that support efficient scaling. So significant scaling and profitable scaling. And that's why we're making these upgrades and changes. So we'll have a modern, scalable IT platform, including process architecture that enables growth and expansion. It will help us even further increase the level of optimization across our business processes, not just in the production, but also many of the other core business processes, and will prepare us for the future so we can use increasingly AI-driven capabilities to drive growth and drive profitability. It will also provide benefits in improving our operational resilience by having a very robust, standardized, integrated and modern system in place. It will help us also in terms of business steering, will provide us better transparency, real-time transparency to our business and different aspects of it and will enable faster and higher quality decision-making. And ultimately, this should translate to a better ability to serve our customers with higher quality, speed, consistency, a very competitive offering. Now this is quite significant piece of work for us, and it will have an impact on our deliveries during quarter 2. It will include such things as actually ramping down production for a temporary period of time in Muurame, transforming the systems from the old to new and then ramping the production up. And because of this, we estimate that there will be roughly EUR 3 million to EUR 5 million worth of shipments shifting from quarter 2 to quarter 3. And this will, of course, move also the related gross margin from quarter 2 to quarter 3. And as we will be working actually long hours, there's not going to be savings in the, for example, employee cost. The direct labor is still present and basically doing these transitions and ramp-ups. So we also expect that there's going to be some impact on the OpEx level as well during the quarter 2. However, this is very well planned. The customers have been informed in advance. We have confidence that we will not be losing any sales. So while this would have a negative impact on our quarter 2, it should have a clear positive impact on our quarter 3. And in addition to having kind of the sales back in the quarter 3, we believe that this transition to the more modern system, more efficient and scalable system will start to pay back rather soon. So with that, I would hand over to Ari.

Okay. Thank you. So this was actually a great quarter. It was an all-time high quarter in terms of sales. And I actually checked back older quarters, it was the second highest quarter in EBIT, absolute value of EBIT. We have been on a higher level in EBIT percentage of sales, but only once in terms of money in EBIT. So the growth compounds also in the profitability. Here, we see now the key figures for the review period. As you have already noticed, we were able to keep quite a good level of profitability in adjusted operating profit and the cash conversion improved also. And net working capital, we have been increasing it due to the sales increase. And number of employees has gone also slightly up, but far less than how much we have been increasing the sales. Here, we see the seasonality of the operating free cash flow. And now if we add those 2 last quarters, quarter 1 and quarter 4 together, we land to a free cash flow of EUR 25.3 million, and it happens to be actually quite the same amount of money what we had a year ago free cash flow during the 6 winter months. So Harvia has a strong cash conversion and the free cash flow concentrates mainly on the winter months. And yes, now we are going down to the Q2, Q3 as in the past. The leverage is actually on a rather low level. It's the pre-ThermaSol acquisition level already 1.0. And just to remind that our long-term leverage target is to keep the leverage under 2.5. That is set up by our Board of Directors, but we could also temporarily go over that. And we would have also easily additional funding needed -- additional funding available from our banks if needed for acquisitions or whatever. The net financial items, the dash line actually shows more the cash effect. They have been quite steady lately. And we have had 2 interest rate swaps, and they will mature now, the first one end of this year and the second one in summer '27, as stated in the interim report. The first one is rather favorable, the second one is quite market terms. We will renew them and try to keep really steady interest costs also in future. The investments during Q1 were much lower than end of last year and also slightly lower than in Q1 '25. And as Matias already mentioned, we have been investing in IT infrastructure, product development and expansion of the Lewisburg factory in U.S. And the need of expansion continues due to the increase of production output. Here once more, our long-term financial targets; annual growth of 10% or more profitability, adjusted operating profit margin over 20% and leverage under 2.5. And yes, we pay twice a year the dividends and the first dividend payment for this year happened actually now end of April '26 and the second installment is planned for October '26. Well, the dividends have been growing continuously.

So now it's time for questions. I've got actually quite much written questions already from -- mainly from our analysts, but there are also some investors. Matias will answer more of the business-related questions. And if there are any finance or such questions, I will answer them. The first one. Sales of steam products declined, and you pinpointed to lower sales to some key accounts in the U.S. What was the main driver for that? Retail reluctancy to grow inventories, brand losing steam, overall weaker -- brand losing steam, overall weaker sellout at retail? Please tell us specifics.

Well, if you think about the channel landscape that ThermaSol has in the United States, we have a few quite big retailers, for example, moving plumbing products, a lot of smaller I would say, mid-market dealers and some special builders. And when I'm looking at this channel landscape, I can see that actually the 2 other channels, which is special builders and more like the mid-market dealers have been -- that has been performing well. However, with a very few key accounts that we have, that was the area where there was softness. I think it's a bit too premature to make any, I would say, long-term conclusions out of it. As I said, it's rather small product category overall for us, and this is basically just 1 quarter. So of course, we are working very hard to make sure that we keep good growth momentum in all corners of our business, including steam, where we see a good strategic potential for us to grow in many parts of the world. And maybe I would also point out that when we look at ThermaSol performance, internally, we see also non-steam products that we can actually get to the ThermaSol's traditional channel. And there we see quite positive development. So overall, our assessment is that we are making good progress. Having said that, of course, there's a bit of a fluctuation between quarters.

Okay. Was there anything in Q1 revenue that kind of would not occur again later in the year or was everything just driven by robust normal demand?

There's nothing particular to mention. I think one question might be that since we informed the customers about the longer lead times during quarter 2, whether that has turned into what I would call advanced buying. But as we've been analyzing that, our assessment is that didn't have any significant impact on our quarter 1 results. The impact will be seen this quarter, quarter 2 and quarter 3. And hopefully, we will be able to catch up fully by the end of quarter 3. Of course, that remains to be seen, but we feel fairly confident about that.

You mentioned that inflationary pressures did not meaningfully impact Q1, but how about the upcoming quarters?

Well, maybe a comment that we've been actually in a bit of a catch-up mode since beginning of last year, so '25. And that relates mostly to our U.S. based business, which was impacted by the currencies and by the tariffs. So that actually meant for us that we had temporarily dip in profitability during last year, and we've then been building it back through various commercial actions, including pricing management, including portfolio and assortment management, transitions to higher-margin products, et cetera. I think it shows our ability to react. We continue to stay very vigilant on what's happening in the market. And we try to also be proactive. And I have fairly good confidence that we will be able to manage also in the future. Of course, if there's big swings in a short time period, there usually is some time lag, as I think our last 3, 4 quarters show. But in the bigger picture, we should be in a good position.

You indicated revenue, some EUR 3 million to EUR 5 million, deliveries shifting from Q2 to Q3. In which geographical areas we should see this?

It will be visible in all the regions. Muurame is our main heating manufacturing site shipping globally. Now then if you look at geographies and kind of the weights of different product categories in each of the region, we can see that in the U.S., there is a very significant part of full sauna cabins and sauna kits, plus steam plays a bigger role. So relatively speaking, it should have a smaller impact on U.S. And then if you look at, for example, North Europe, the business mainly is heating equipment business that we have in this corner of the world. So of course, relatively speaking, it impacts a larger portion of the regional business in North Europe. And then the other regions are in between.

Okay. Then profitability question related to this. Can you quantify the profitability impact of the postponed deliveries in Q2? Is the margin below, above the group level? Is it possible that some of these deliveries were delivered already in Q1?

Well, the information that we have given in the release is the information we've given. Basically, this is something that you should be using in building your modeling. But ultimately, the logic is as follows, there will be less deliveries from Muurame. Usually, when there's changes in the volume of our production, we're actually pretty good at managing also all the direct costs. But in this case, the direct labor is actually working pretty much throughout this transition. So there will be lower deliveries, and at the same time, direct labor will be actively working. And there's also then some additional support from our partners that we will be basically buying to support us in this transition. So there's also some OpEx sort of indirect OpEx impact also during the quarter. So that's basically the logic that you should think through. And then our target is that then we would see a good rebound as we go to quarter 3.

ThermaSol has been part of the group for over a year now. And you have previously said synergies are ahead of plan. However, the steam category has been soft, partly explained by the ForEx headwind, but that does not fully explain soft trends at key steam accounts in the U.S. Can you explain what is behind the weakness and your actions to improve ThermaSol's performance? Would it make some sense to first drive improvement at ThermaSol before looking at further M&A as this may increase execution risks for the group?

Well, first of all, steam, as said it's not only ThermaSol. We had steam business already before that and a significant part of that has been in the Middle East. And so steam category does fluctuate quite significantly depending on, for example, project deliveries. And in the bigger scheme of things, Harvia has, I would say, a meaningful project business only in the Gulf or Middle East region. And usually there, we have actually a significant steam component. So when you look at the steam, it's not just ThermaSol. And the other point is that we had 3 logics for acquiring ThermaSol. One is enter and grow the steam category. The second is use ThermaSol's channels for cross-selling because ThermaSol had, I would say, better access than Harvia used to have for the higher-end homes and certain commercial end users as well. And then thirdly, use their digital technology to strengthen differentiation, not just in ThermaSol's part of portfolio, but also more broadly in the group. And there are many things that have been going very well. Now of course, would we like to see more? Of course, yes. Do we have plans to accelerate? As in many parts of our business, yes, we do. And they include, of course, commercial actions, sales actions, also continuous development of the portfolio, sometimes also certain clarifications of frozen responsibilities to make sure that we work as effectively as we can. And hopefully, in the coming quarters, we would be able to tell a story through also numbers that things are working.

Which channels and product groups contributed the most to North American sales growth? Where do you see the most traction going forward?

Well, as can be seen in the growth bridge when we look at the product categories, the heating equipment was clearly the driver overall globally. And that is the case also in the Northern European -- Northern American market. So the biggest growth came from our heating equipment business. Having said that, when we look at the cabin business, as I pointed out, we had 60% growth or 59% growth in the quarter 1 '25, where there was a very significant jump in the cabin business revenue. So we had a very tough comp from that growth baseline plus then, of course, the currency sort of minus 10%. But as I said, it's -- heating equipment was the driving factor. But all in all, when we assess the momentum across the product groups, we feel confident and positive about the future of each of the category.

What is rough estimate for Q2 temporary costs related to IT upgrade, excluding the volume component?

Well, this guidance that we've now provided is the guidance we give. That you have to just take and think it through. Now maybe you would have a question that why did Harvia now give some indication of what's happening in quarter 2 when we usually don't provide any kind of short-term guidance. And there's a rationale why we usually don't provide any short-term guidance, and that is the nature of our business. We are in rather dynamic quick-based business where typically kind of order books are rather short and delivery times are quick. That is very different to running, for example, heavy machinery business where you have an order book for maybe 24 months. And you can quite easily then calculate how much of that order book you will be turning to revenue during the quarter at hand. So that's kind of the fundamental reason that the business is very dynamic, and we built the company very much for the long term. However, in this case, we decided to make a bit of an exception because this is something that is purely Harvia's own decision that, of course, would have come as a very big surprise also to the market. And it has nothing to do with the market dynamics, rather a significant upgrading of our processes and systems. And we felt that it's the right thing to do to share that this is going on pretty much as we speak.

Can you explain the Lewisburg expansion in practical terms? What was your production capacity and utilization before? And how much additional capacity will the expansion add?

Well, when you look at our track record in North America, it is, of course, quite impressive. If we look at simply numbers like we bought Almost Heaven Saunas end of 2018. And if we just simply look at then from 2019, so post-acquisition to the end of last year, our average growth rate in the region has been in the range of 35% CAGR per annum. It was quite easy to grow when we had a lower base. So growing on EUR 10 million, 30%, 40% means just EUR 3 million to EUR 4 million additional revenue for the next year. But when we start to get closer to, say, $100 million and beyond, of course, the jumps are quite significant. And we have been now systematically working on our capacity planning for North America to be able to sustain this growth. As part of this work, we bought a significant piece of land around our site. It was at the end of '24. And basically, since then, we've been doing site planning. So we have actually a vision of how the site will look like when hopefully we will be much bigger than we are today. And we have now started the expansion, prioritizing areas where we would have hit the capacity bottlenecks the quickest. In this case, it is actually warehousing and shipping. This business is rather seasonal. And that means that we need to be able to build enough ready-made products in the inventory to be able to sell and ship it quickly. And also then we, during the high season, have many trucks coming and going. So this is what is now happening on the site. So during the spring, we'll finish this part of the project. And then we are looking at the next steps and balancing that with the growth outlook. But overall, you should expect that investments in further growing our site in Lewisburg will continue in the coming years.

Then another question to the temporary costs, which the magnitude, okay, we didn't tell it exactly. But then is it reported as non-recurring item or part of recurring earnings? It's actually not a non-recurring item -- reported as a non-recurring item. It's either in the normal operative costs or partly activated as a long-term expenses and will be amortized over the time. So it's not an NRI item. How the tariffs for U.S. export business recently changed?

Well, it's been a bit of a rocky ride or fast ride. So basically moving from having 4% tariffs for our products. We're talking about heating equipment in particular because the sauna cabins we make domestic inside the United States. So the category that we mostly import to U.S. is the heating equipment. And we used to have a tariff scheme of around 4% before the beginning of last year, so since a year ago. Then the tariffs have been coming and going at some point in time, clearly above 20%. So actually adding 15 percentage points to our kind of landed cost in the United States. At the moment, the effective import duty rates for our heating equipment is actually around 14%. Now I would also then highlight 2 things. One, around 2/3 of our sales in the United States is the cabin -- sauna cabin business, which is basically domestically produced. And then the heating equipment that we ship to North America actually goes to 2 destinations. One is our own distribution center. And if that's the destination, then we will pay the tariffs. But also, we have container customers, and we ship to them and they pay the customs.

Yes. And it has also been concluded that partly the tariffs in the past were not totally legally acceptable, and there might be possibilities that some industries and companies get also the overpaid tariffs slowly back through court decisions or through applications. But we are looking for -- what are our possibilities there. What is the financial impact of postponed deliveries in the Middle East?

Well, overall, as I said, the Gulf region, Middle East represents roughly 2% of our global revenue. And if you think about -- put it in the context of last year, we had EUR 200 million revenue. That then equals to around EUR 4 million. And by quarter, it's roughly EUR 1 million a quarter. We did lose some hundreds of thousands in the Gulf during the quarter 1. And depending how things will go, it is likely to cause some disturbances in the deliveries. However, as said, in the bigger scheme of things, it's not very material.

The Middle East conflict this year compared a little in a lengthy question with the COVID boom when people were spending a primary time at home and so not traveling abroad. Do we see that kind of phenomenon now like during the COVID years?

Due to the Iran situation?

Yes, due to the Middle East situation, yes.

Well, we haven't observed that. The kind of the way we think about it is that there's, on one hand, the direct impact on our business in the Middle East, which I just commented. And then, of course, the indirect impact. We feel that the biggest impact would come from inflationary pressure, for example, ocean freight, energy, general inflation and potentially impacting consumer confidence. Now when it comes to inflationary pressures, we are vigilant, as mentioned earlier. So we then will do our best to make sure that we have the right commercial actions to also protect our margin even in inflationary scenarios. And then when it comes to consumer confidence, I think the story that we've now shown in the United States during, for example, past year in '25, we grew by 22% in euros and around 26% in dollars, '25. When the consumer confidence was already significantly lower than in the -- actually several years before that. And we now reported the results that you can see. It, in my mind, confirms our assumption that our category is rather resilient to overall consumer confidence and the value proposition that we have, which is well-being and health, both physical and mental in enjoyable relaxing way is something that resonates really well and that this category is just in the very early phase of development. And since there's so much market to win, we feel that we are well placed even in a world where the overall consumer confidence might be somewhat impacted by the Iranian situation.

Then a little discussion about the sales shifts between Q1 and Q2. Did you see any shift in demand during the quarter because of Iran and the other -- and otherwise, because of the IT upgrade?

Well, the Iranian situation is that we were not able to ship everything that was planned because the customers were not in the position to be able to receive the goods. So it did have an impact on our quarter 1 and most likely will have some impact on the quarter 2. As I said, in the bigger scheme of things, we talk about a region roughly EUR 1 million per quarter, and it's not impacting the whole region, Middle East that we report. It's quite specific projects and specific customers. When it comes to the operational IT system process upgrade, we did inform the customers during quarter 1. We've also been observing because, of course, we are quite interested in understanding also how much is the potentially advanced demand so that we can prepare better for the quarters to come. And our assessment is that it didn't have a material impact on the numbers we reported and the numbers will be impacted in quarter 2 and quarter 3.

Matias, during the AGM, you mentioned that continued P&L investments are required to scale the business. However, you are running ahead of your model of around 10% sales growth. Is there more upside risk to your outlook on operating leverage or will you accelerate investments even more as the growth keeps running in the midterm percent?

Well, overall, the way I see this is that we are -- we have an extremely, extremely attractive position to play. We're a global leader in a growing category where we see growth opportunities in many dimensions. One is in terms of products, product leadership and portfolio and expanding the product categories where we play. Second is growing in significant size markets and also building our channel landscape. And for example, Sweden is an example that finding the right partners can really have a quite significant impact on the commercial success. Now we have our long-term financial targets, which basically says that we aim for double-digit growth. We are ambitious and hope to deliver strong results in the coming quarters. At the same time, it's not going to happen just by waiting for the orders to come. So we are investing actively. And there's kind of -- the way I see it is that if we are reporting below 20% EBIT margin, then it's not something that we planned. We try to keep delivering above 20%. But then again, if it goes significantly above 20%, then my judgment would be that we have been underinvesting and being too cautious. So that's pretty much how we see it. We want to keep investing over the next 3 years quite offensively while still delivering short term. And then as we hopefully will be clearly bigger company than we are today, then we really see the revenue growth, gross margin going through all the way to increasing EBIT, not just absolute, but also margin.

Then there is quite a detailed question about the tariffs. What are impacts of tariffs in Section 232 in April? Well, I have to say that we have been working very actively in our operations and in our administration on the tariffs, and it keeps us busy. But frankly speaking, we can't answer all the details right now here. But I understand that the tariff situation interests all market parties. And when we have something definitive to report, we will certainly tell more. Okay. A couple of questions, which have been more or less like answered already about the IT project. There are talks about U.S. tariff refunds. What is your view on this? We have heard about that too. Yes. Okay. These were the questions right now. Thank you very much for participating, and thank you for your interest.

Thank you.