Indra Sistemas, S.A. (IDR) Earnings Call Transcript & Summary

Good morning, and welcome to Indra's Q3 results presentation. I now hand the conference over to Mr. Ezequiel Nieto, Head of Investor Relations. Please go ahead.

Good morning, everybody, and welcome to our presentation. Thank you, everyone, for joining us today, especially those of you who have been able to come here in person. I'm Ezequiel Nieto, Head of Investor Relations. And as usual, let me refer you to disclaimer on Slide #3 that shows the legal framework under which this presentation must be considered. Now let me introduce the participants of this call: Marc Murtra, Chairman of Indra; Jose vicente de Los mozos, CEO of Indra; Borja Garcia-Alarcon, our CFO; and Luis Abril, our Managing Director of Minsait. Now let me turn the call to Marc Murtra, our Chairman. Marc, the floor is yours.

Good morning, everybody, and welcome to our 3Q '23 results presentation. Before our CEO showcases our strong results, I would like to highlight some relevant contextual points. We are in a time of transformation and opportunities in our key markets. The world continues to change. Security events have dramatically accelerated the concern and focus on defense and security in the European Union and its allies. We expect defense spending to grow dramatically in the coming years. Strategic autonomy strongly emerges as a global trend. Air traffic recovery has been surprisingly swift after COVID, and we are now in 2019 traffic levels. Growth for 2024 is expected to be above 4%. Mobility's new paradigms are reaching maturity such as pay-as-you-go service, free flow or mobility as a service. Technology has changed the playing field significantly with the growing demand for cybersecurity and generative artificial intelligence. G&A -- sorry, Gen AI specifically has a potential to be a game changer. We are fully aware of and have internalized the disruptive changes that are on the horizon in the realm of technology. We are actively preparing to navigate this new era. Key changes are steady underway, and we are strategically focusing on high-value, rapidly growing market segments. So we continue with our transformation of our company. Our previous strategic reflection unfolds as our new strategic plan, which will be well timed, ambitious and achievable. Regarding corporate governance, we have established a new Board Executive Committee with 8 members, 4 of whom are independent, to accelerate decision-making. Finally, after reorganizing our key management team, we are now rolling out these changes to the downstream structure to ensure that they are implemented effectively. We believe that these changes will allow Indra to successfully navigate this era of uncertainties and opportunities to achieve its full potential of growth and value. Now Jose vicente will explain the results in detail. Jose vicente?

Thank you, Marc. Good morning, ladies and gentlemen, and welcome, everyone, to the war room of leading the future, the place where we are developing our strategic plan. We have so many to introduce to this specific place because we wanted you to experience it first where our team from senior managers to the fresh talent is defining Indra's future for the next 10 years. Let's move now to the Slide #6, where we display the main 3Q results highlights. As you can see, the results for the first 9 months of 2023 continue to be strongly positive, reaching a new all-time high in order backlogs. This commercial momentum fosters revenue growth turning into a spectacular growth in earnings per share, which grew 35% (sic) [ 26.4% ] compared to the first 9 months of 2022. Indra's revenue continued to experience double-digit growth, mainly led by Defense, FCAS and Eurofighter, and Air Traffic. This growth, accompanied by our focus in maintaining our operating profitability, resulted in the spectacular net income double digit growth. Cash generation endured our historical performance being the best 9-month figure ever, reducing financial leverage to 0.1 [indiscernible] again. This strong 9 months financial performance and momentum will allow us to focus during 4Q 2023 in our strategic plan, Leading the Future”, that will guide our transformation journey during the following year, as I will elaborate later. As other significant milestone, our M&A activity has resulted in the equitization of a 9.5% stake in ITP, a 30% in Epicom, another bolt-on acquisition, such as Park Air in U.K. and Nae. All these acquisitions met 3 conditions: number one, rational industry; number two, financial sales and fair control significant influence. Additionally, we have repurchased plus EUR 200 million convertible bonds in order to prevent our shareholding dilution. The new strategic plan will address the main challenge that the company is currently facing. It is the [indiscernible] and clear accountability to ensure proper implementation. The main areas that are being discussed in the preparation of the plan are: number one, portfolio management based on clear M&A rules, both in terms of big base and bolt-ons. Second, product simplification. We need to be focused on creation from a value-based perspective, targeting at a state-of-the-art portfolio. Important point, geographic footprint optimization. We are in too many countries we need to optimize considering the impact both in the go-to-market and operational model. And very important for us, creation of a technology ecosystem, leveraging key player, startup, university, and research centers. New engineering model to ensure the highest standard in the design processes and capability and excellence and efficiency in operation to deliver the best products and services to our customers. However, as cross-cutting capability and best practice have not been tackled up to the moment in this strategic plan, we are currently addressing development and implementation of digital cross-cutting capability and talent initiatives intended to become top-of-mind employer to digital and engineering and ESG commitment. Finally, we are refining our evolution to the new Indra 4.0 from an end-to-end perspective in our processes and systems. The end-to-end process to prepare the strategic plan has already started. Phase 1 intended to define the strategic guideline of the company among the Executive Committee members was finished with full alignment by mid-September. Phase 2 objective was to set up the bottom-up initiative to deliver the strategic guideline started by late September. This stage is completely different layer of the organization. Example fresh talent to work on the actual initiative. Senior management to guide the union members and sponsor to validate the actual proposed objectives [indiscernible] under the methodology of BCG. That's a methodology that is I have led when we implemented resolution with [indiscernible]. I believe in this methodology to develop this strategic plan, which will ultimately ensure full participation for the different business, function and countries, and accelerate the understanding and implementation of the plan. We expect to finalize our final draft by December of this year and hold our first Investor Day by March 2024. We are monitoring the progress of the plan on a daily basis. We update the master plan and the progress KPI. Today, you can ask me where you are. Today, we are at 39% done, that we monitor every day. All in all, we are in a good ship to achieve internal strategic guideline that we agreed in Phase 1. Now Borja will explain in detail our result in the first 9 months of the year.

Thank you, Jose vicente. As you can see, Page 10 contains the headline of our results in the first 9 months of 2023. Let me highlight the following. The first one is that the 6 variables that are displayed in the screen, backlog, order intake, revenues, EBIT, earnings per share, and free cash flow are growing at double digit, and this growth comes on top of the already good results presented in the same period of 2022. Second, this figure provides good visibility for the near future. The backlog that reached 1.67x to sales and the order intake that grew you 10% into the first 9 months, accelerating to 16% in the third quarter. Third, despite the headwind that wage inflation in place for us, we have managed to maintain margin at 7.6%. Our continuous focus on working capital management and control are giving to us good results in terms of free cash flow. And as you can see, 56% of the improvement of the free cash flow in the first 9 months comes from working capital optimization. Then in Page 13, we have improved our revenue per employee by 10%, keeping headcount almost stable compared to December 2022. Now once we have the big picture, and this has been presented, let's dive into the reasons and pillars of that evolution starting in Page 15 with Transport and Defense. As the Chairman said, on the back of the incremental expenses in Defense in all our geographies, and the recovery of the air traffic to pre-COVID levels, most of our clients increasing their investment in this field, T&D backlog grew by 16% in the first 9 months of 2023, and now represent 3.23x sales of our last 12 months. Order intake grew by 6%, but remember that in the first 9 months of 2022, order intake grew by 13%. So these are very good figures. And going to sales, it grew 17% in the first 9 months of 2023, and 28% in Q3, with a very strong growth rate in Defense and ATM, and on the back of the contribution of FCAS with EUR 100 million of sales, the mentioned recovery in air traffic investment, and the contribution of Selex with EUR 10 million of revenues since the acquisition in the second quarter. Although it's important to note that excluding Selex, ATM will have posted double-digit growth in the first 9 months. With regard to Transport, it declined by 7% due to the lower contribution of [ saleable ] contract such as T-Mobile -- sorry, T-Mobilitat and the Ticketing and Control Systems in Egypt. And finally, on top of this solid revenue growth, EBIT margin grew by 11.3% at the end of September 2022 to 12.1% at the end of September 2023, closing the first 9 months with a figure that is consistent with our expectation for EBIT margin in Transport & Defense for year-end. Moving now to Minsait, in Page 20, the summary is also very strong. And we have very good visibility for the near future as is shown by the evolution of the backlog that grew 18% in the first 9 months, and order intake that grew 12% with almost all verticals growing order intake at double digits. Energy & Industry grew at 16%; Financial Services at 14%, incorporating the contribution of Nexus; Public Administration at 9.5%, offsetting the impact of Angola in 2022; and finally, Telecom and Media at 7%, offsetting a relevant contract signed in Colombia in 2022. Revenue grew at 9.6%. And as you can see in Page 21 and 22, well distributed among the different verticals with inorganic contribution of Nexus of EUR 60 million in the period. Here it is relevant to mention that if we take out the negative delta of Angola and the contribution of Nexus, the underlying growth rate of Minsait would have been 12%. And now despite the headwinds generated by wage inflation, we have managed to close the first 9 months with an EBIT margin of 5.3%, a figure that is consistent with our view for year-end that, as you know, is more than 5%. And finally, by horizontal, we have improved our mix with Digital & Solutions growing by 10% compared to the first 9 months of 2022, and now representing 56% of our sales. We move now to Page 26 with a review of the financial section. As you can see, as in the past, I will start with the free cash flow generated in the first 9 months that amounted to EUR 117 million, reaching a new all-time high for our company. As I said at the beginning, what is important here is that 56% of this improvement comes from the working capital optimization as we will see in the next page. On Page 27, we see days of sales remain almost stable compared to September 2022. But as we are working to reduce seasonality through the efforts to improve collections, even with the same days of sales, at the end of September, we have improved working capital needs over the first 9 months versus September 2022. Inventories that have suffered an increase in the first 9 months due to the high level of work in progress and stock building will decline in the fourth quarter, in line with the seasonality of the business. Page 28 shows the net debt evolution in the first 9 months of the year. The first step is a strong operating cash flow of EUR 292 million due to the excellent performance of the business that we have just commented. As mentioned, net working capital needs of EUR 79 million, well below EUR 114 million posted in the first 9 months of 2022. Net interest at EUR 14 million, posting an improvement compared to EUR 22 million registered in the first 9 months of 2022. And finally, we have paid EUR 170 million (sic) EUR 175 million for the acquisition of the 9.5% stake in ITP Aero, together with EUR 45 million for the acquisition of ATM Selex division in the U.S. in the second quarter. With all this, we have closed the first 9 months of 2023 with a net debt of EUR 233 million and a leverage ratio of 0.6x net debt-to-EBITDA, as you can see on Page 29, and as you see, it's the same figure that we had at the end of September 2022. And now to finish my speech, a quick look to the debt structure on Page 30, where I will highlight 2 things. First, we have substantially reduced the gross debt levels as we have canceled the convertible bond that matured in October with cash, and we expect to do the same with the bond that matures in early 2024, together with some bank loans. At the same time, we have increased our liquidity position with the EUR 500 million -- 5 plus 1 plus 1 multilateral credit line deal signed, so that we maintain the liquidity while canceling gross debt with cash. With this, we finish the presentation. Let's move to the Q&A session. Today, we will take the first question from the analysts that are physically here with us in our room, and then we will answer the question of the audience in the conference call. So...

The first question is, given the current macroeconomic situation, could you give us some color on how you see business evolution in the fourth quarter? And secondly, after the acquisition of the 9.5% of ITP Aero, do you plan to increase your stake in the company?

Well, our expectation of 4Q is in the same train as 3Q, okay? We don't feel the big chance to finish the year. We are confident and I think we'll continue the trend and know they'll be surprised. About ITP. ITP, why Indra go to the ITP capital? Very simple, I think more -- Indra, we are [ systemistic ] company, okay? More are more in the powertrain, all the sensing will be in the [indiscernible]. That makes sense to developing a system close with the powertrain. And ITP is 1 of the best company in low pressure turbine in the world. That can be a good deal from an industrial point of view to develop in the future a Spanish technology in the powertrain. What happens in the future? Nobody knows. That will depend when we decide to live. But for the moment, we don't have news. When the moment arrives, we'll study. But now I think it's very early for this.

Carlos Trevino from Santander. 2 questions from my side. The first 1 is, in your introduction, you had been talking that the new strategic plan is going to define clear M&A rules. I don't know if you could elaborate a bit on this as of today. You are also talking about transformational M&A deals. Specifically, my question there will be, if those transformational bets, could be in the current businesses that you have, what you could consider to expand to other businesses. Even if those -- well, even if you could be taking any kind of financial stake in any company, if those are going to be in your current footprint or you could go to other businesses? And my second question is, you have a very strong backlog, again, all-time high moving into next year. If you could elaborate a bit on the kind of growth prospect that we could expect, specifically in T&D. I can imagine that in Defense, the comparison is going to be tougher. Still you have 1 additional quota from the FCAS project, but what kind of trends do you see in the 3 businesses there in Defense, in ATM, and in Transport?

I will start by the first question, with the support that Marc -- about the M&A rule, because I think it's very important, he's supporting the Board with also the level to be agile. Strategic plan is very simple. Which product, where we sell, which technology we'll use with it, with the right people. When the problem -- if possible, water -- sorry.

Yes. Whilst they bring water -- thanks, Carlos. So of course, first, we need to determine and approve our new strategic framework. And what we're sharing is that we will also approve and share what are the rules -- what is the logic with which we will do M&A operations. And that has to do in part with some of the speculation that there has been in the past. And I can advance that they will have an industrial logic, the rules, and will always make financial sense, and that will be easy to check by market. But at this stage, we can't really advance anymore because we need to wait for the market capital day.

I think the important point is, management, we are working in the strategic plan with ideas. The strategic committee from the Board are working here. Now thanks to Marc's support with the [indiscernible], we can accelerate the decision, and now we are working, everybody in the same line. That can be more agility of the company. About the backlog. Today, Indra increased the credibility about the Defense programs in Spain and Europe. Example, FCAS. We have shown to the defense minister and the supplier that we have the capability to become the prime with this, because we have taken this leadership. We will discuss with our partners in France with Dassault, and Germany with Airbus. And today, we have deployed more than 70% of the activity in the Spanish ecosystem with agreement with a company with [indiscernible] will integrate in FCAS, that when you increase your credibility, it's normal that the backlog grows, because more and more we become legit team, known in Spain, also in Europe. For example, maybe you don't know, but in the last 14 initiatives in Europe for R&D, Indra has been 90% of this, okay? That now will continue to grow, but be careful, we need to continue to refocus the product. My feeling is we produce too many things. We need to be focused, and these product, we need to industrialize. I give you the example about the radar. We have today 70 different radars with 0% [ commonalization ]. We're going to go to 5 radar families with 60% standardization. This is the big change because we need to develop programs in Europe, but also we need to accelerate the sell in international, because more and more we look, that we have opportunities.

Ivan San Félix at Renta 4 Banco. Well, congratulations on the results. I'd like to ask you on Minsait EBIT margin. So far this year, it's 5.3%. It will probably be quite similar year-end. Do you see or should we expect a big improvement coming up next year? I know that the previous management talked about a potential 7%. Do you think that's achievable in a few years' time?

Before going to Luis, I want to thank all the jobs that Minsait do, because now we are aligned with disclosure. All the activity in Minsait, they are strongly work and they are involved in leading the future to give the sense what is with the future, but I think Luis?

Yes. Thank you, and we see -- margin is probably 1 of the challenges we have in Minsait, okay? Because as you know, for achieving this 5.3%, we have had to offset the impact that last year had the project of elections in Angola, which as you know, these kind of projects are typically projects of good margin. Plus also every year, in Minsait, in this business, we have to offset also the impact of salary inflation, which is significant. Last year, it was around 6%, and we've been able to offset that. Next year, we won't have to offset elections, but probably we will have salary inflation as well. But still, we do have the levers that we typically are using for keeping on improving margins consistently as we've been doing in the last 2, 3 years. We have efficiency levers. We'll keep on pushing the change of the offering mix towards more high value-added offering and so on and so forth, okay? We'll probably calibrate a little bit the mix of geographies we do have, trying to go more to high value-added geographies. So we will keep on acting on all those levers for keeping on improving margins. We will guide on the margins we will be able to achieve in 2024 in a few months. But our goal, our target initially is to, as you said, keep on improving.

Antonio Marquina from JB Capital. I would like to ask you about some rumors in the press regarding Hispasat. I would like to ask you if it's 1 of your M&A pipeline targets that you will have? And if so, I would like to know the synergies of this potential deal.

Well, if I read all the speculation -- we were in the press every day. I don't answer about speculation. The only point is, it's strategical in the future in defense. Why? Because all communication will go by this space. If 1 country wants to be sovereign in the communication, need to control the communication. That is we are studying in the strategic plan how Indra can work in this new ecosystem and that is part of the strategic plan that -- I don't answer speculations, but we are working in defense, how to develop in the sea, in the land, in the air, and the space. That's part of our strategic plan.

Alberto [indiscernible] from Alantra Equities. The first 1 you mentioned is you plan to do some rationalization of your footprint and product portfolio and some also industrial synergies. I would like to know whether this would be reinvested to accelerate growth? Or should we expect further margin improvement in the future in the T&D business? And also something that you have not mentioned regarding the strategic plan is regarding capital allocation. Of course, M&A and consolidating and growing in defense and IT is important, but what about shareholder remuneration? Could you provide some guidance on that?

Well, I think about IT, I'll let Luis, but I think he has answered -- he continues to reward the team to increase profitability.

Yes. On IT and then, if you want, on defense. I don't know if you asked for defense or for both. But on IT, basically, again, we will keep on pushing on the same trend with being following the last couple of years or something like that. On the product portfolio, basically, what we've done is to focus on what we call the 4 accelerators, which in terms of offering our payments, what we call Phygital, which is the integration of other solutions which fall under the category of the integration between the physical and the digital world with sensors and these kind of things. That's like the second accelerator. Then you have data cloud. And then the fourth one is cybersecurity. So our idea, a part of all the services that we typically provide, is to push hard on these 4 accelerators. And that's going to be part of the refocus. Probably, in the new strategic plan, we'll make some adjustments on these priorities in terms of offering, but it's going to be more or less, at least in IT, following the trend that we've been following in the last 2, 3 years.

Our capital allocation will [indiscernible]. Also I think it will be important that the Chairman say what is the opinion about capital allocation. We have 3 types of strategies. First one is efficiency. Second one is to develop strategic alliance. And third is to buy. That we are working in these 3 axes, and the Board, I leave the Chairman to give his vision about this strategy.

Thanks, Jose vicente. So one of the characteristics of the markets where Indra is operating is that we have many, many opportunities. We have opportunities in defense. We have opportunities in mobility. We have opportunities in IT. And within defense, as the CEO was saying, we have opportunities in all 4 domains. So what we need to think very carefully about is the priorities. We need to think very carefully about how much money we're going to invest in CapEx to develop technologies, to improve productivity and to grow in terms of M&A. So unfortunately, I can't answer -- or we can't answer at this stage. But this is probably 1 of the parts where we're giving it more thought. Where is it we're going to go towards, what are the priorities, and how it all makes sense so that there is efficiency, synergy and scale?

About shareholder remuneration...

Yes, sorry. Thanks, Jose vicente. And as part of all this, we need to think very carefully how much money we return to our shareholders and how much we reinvest. But what we'll do is we'll explain the logic very well and the why of the logic.

Alfonso Enriquez from CaixaBank. I just have one. We have seen just the news reports talking about shareholder changes in Telefonica and the possibility of Indra participating in these holding changes. Can you comment on that, please?

As Jose vicente was saying, we don't comment on speculation. We reiterate, we take our investments very seriously. We want to do industrial investments. And anything that has to do with our strategy, we will be sharing with you, as I said. But I do take you to the backlog of speculation that there has been for a long time with regards to Indra.

Yes. One question regarding wage inflation. What do you expect regarding wages to increase in the next year, in 2024? What are your forecasts, especially in Minsait, please?

Depends on the country.

In Spain.

I think we are studying and we'll work with the Board before the end of the year to give a guideline for the piece. But for the moment, we didn't decide it. As Luis and I said, in Minsait and Spain, we need to decide it and approve by the Board.

Still we feel a little bit less [Audio Gap] on Q1 resources than 1 year ago. Last year, it was 6% overall, but still, we have to make the calculations for the budget and so on and so forth.

Now, maybe we can give the floor to those in the conference call in case they have questions.

[Operator Instructions]

No questions. Good news. That is no questions. First, I want to thank you all analysts because in the last month, I think you have supported too much with a very clear return that -- ah, 1 question.

Yes, we do have questions. The first question comes from the line of Laurent Daure from Kepler Cheuvreux.

Yes. A couple of questions from me as well. The first one is, I would like to go back on the Q3 performance of T&D, you had an operating -- an EBIT margin of over 16% with a strong contribution from FCAS. And I thought the FCAS program was a bit less profitable than the Defense business. So what made you achieving such a great margin in the third quarter? My second question is on the Minsait. I mean, a lot of your competitors are talking about the markets slowing down quite massively in past weeks. So what is your short-term view? Do you see any changes in utilization rate, conversion of bookings? Or do you still see the same trend as in previous months? And my final question is back to the comments you made about the fourth quarter. To make sure I understood well. Basically, when I look at the guidance, I know it's, of course, over a certain amount, but the guidance is calling for pretty muted growth in the last quarter of the year. So if you could [ reconciliate ] your comments about potentially a strong Q4 and the guidance which we are just making?

I will start by the last one, and later, Borja in Defense, and Luis in Minsait will answer. I arrived 5 months ago. In July, in H1, I think the company had a potential. I wanted to know what is the maximum potential this company can deliver. And we decided we support the mark to increase 4%, okay? Now is 4Q, okay? We are in good trend. But I don't know in detail this company. That I prefer to be at this moment -- and it's staying for me conservative. But my first year in the company, I want to assure the closure of 2023, okay? It's for that we have decided not to increase the guidance. We need to see -- now situation is very stable. I prefer to finish with the guidance we gave in July and to be focused in the strategic plan and to finish the year and prepare in good in trend 2024.

Thank you, Jose vicente. Well, with regard to the margin at T&D, 2 things. First of all, we are performing well in terms of FCAS and Eurofighter. So that's the results you see. But it's important to know, as you know well, that it's difficult to extrapolate our quarter to the total picture of the company. So I think in order to have a picture of how it's going to be evolving in the fourth quarter, your view should be that we are going to maintain margins about 12%. So take this quarter as a good quarter, but it should not be extrapolated to the future with that margin.

I take the one on Minsait. Thank you, Laurent. You know the truth is that we see no significant signs of slowdown so far. We cannot deny there's uncertainty. That is true. And we have some of our peers being probably a little bit more pessimistic than what we are. But the matter of the fact is that we see consistent demand. We see things are running pretty well. We see no changes in utilization rates, as you were saying, nor in the conversion of bookings. This may be because of several reasons. You know the matter of the fact is that our customer base is composed basically of large customers, which are probably less exposed to potential crisis than SMEs. Also, we have several or many multi-annual contracts, and we probably participate in projects which are very core in terms of activity of our customers as well. So we see the activity quite resilient. And in any case, we all know that this sector is late cyclical and there's uncertainty. But so far, as I was saying, no signs of slowdown. It's true. The only thing is what I was commenting before, that probably we feel -- which is not necessarily bad, we feel a little bit less pressured on labor markets and churn rates of labor force has probably gone down a little bit, but that's all.

The next question comes from the line of Gregory Ramirez from Bryan Garnier & Co.

I would like to get, I would say, a bit more insight on Q4. What -- where, I would say, first of all, on Minsait, is the cost base. Could you remind us the cost base [Audio Gap] in Angola in Q4 of 2022? And my second question is regarding the FCAS. So you mentioned EUR 100 million contribution over the first 9 months. What do you expect for Q4?

I think, yes, on the cost base, I mean you know that the key element in the cost base of the IT business is basically labor, and vis-a-vis 2022, the cost inflation was 6%. So that's what we've had to offset in order to achieve the margins that you are seeing.

Yes, with FCAS, for 2023, we expect to see EUR 140 million in revenues.

That we have already EUR 100 million. That for Q4 is EUR 40 million.

Next question comes from the line of Kathinka de Kuyper from UBS.

Most have been answered, but just a few quick ones for me, please. Just coming back on current trading. So you're not seeing any deal signing being delayed or anything due to the macro? Second of all, in Minsait, can you just comment on the pricing trends that you're seeing in the market? And then finally, how should we think of the headcount growth for next year given that this year you kind of have flat headcount?

Well, I answer on number 1, and Luis will continue number 2. I think about current trends, it depends on the business, okay? All the trends are the same in either traffic or defense or TI. That depends on the business, the trend is different. For example, in TI, it is slower than -- stronger if we look in defense. And also the market is not the same, Europe, that Latin America, that -- it depends on the business and the market, the trends are different, and we are studying and we are adapting at this trend. About pricing on Minsait, Luis?

Thank you, Kathinka. On pricing on Minsait, there's a lot of competition, and it's tough to maintain prices at current levels, because particularly in those services, which are not very high value-added, competition is tough. But still, we are managing to keep prices at a relatively good level, doing different things and acting on different levers. One of them is the one I was mentioning before, which basically consists of changing the mix. We do less services now and we have more high value-added projects around the 4 acceleration vectors I was mentioning before. And that allows us to increase prices a little bit. But for the same base, if you want, of activity, let's take BPO services, the matter of the fact is that there's a lot of competition, as you know.

Well, about 2024, it's a little early in this macroeconomic context and geopolitical situation in the world. But I can say you today that 2024 for us will be a good year. Why? Number 1 will be, I think with the new organization that we have employed business units, we can improve the efficiency in our business. That's number one. With the decision we'll take in our strategic plan, we can see some first results, and additional to the market trends, we can show you and we'll announce the result of 2023, probably in the future the trend. But we continue to be optimistic, but realistic. And we need too many work to be done inside to become a good company. We're in the process. The final comments -- before that our Chairman closes this session, first, I want to thank you all of you analysts, because in a different meeting I met you, you have been, first, confident with Indra, confident in my appointed. I told you, Indra is a very good company. The talent I met here is amazing. I think we're leading the future. We can show a transformation in this company and become an after in different works today. It's clear in TI, we may sign we are referenced. In air traffic, we are reference. In Defense, we need to grow to become somebody in Europe. And Mobility, we need to be focused in technological mobility. That we know where we can go. I think your continuous feedback supports us, [indiscernible] us to take the best decision. Thank you, and I see you when we close 2023. Marc?

Yes. And I want to thank Jose vicente for bringing his tremendous synergy to the company, and it's great working with him. And things, I think, are going very well. Also, Luis, for his ongoing and continuous wonderful work on the IT business, which you know is a tough business. It's not for everybody, and we see the future with optimism. Of course, we have to deliver, we have to focus, we have to work hard, and there are always risks, but risks always come with return. So thank you, everybody, and thank you, Borja, and the team for organizing this. Bye. Have a good day.