Jenoptik AG (JEN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Jenoptik conference call regarding the results of the first 9 months 2023. [Operator Instructions] Let me now turn it over to your host, Dr. Stefan Traeger.

Yes. Thank you very much, and a very warm welcome also from our end here in Jena to our 9 months earnings call. With me today, as always, is our CFO, Prisca Havranek-Kosicek, and Prisca is going to guide us through the numbers in a lot of detail. Prior to that, though, let me take the opportunity and just point out some highlights of the first 9 months of this fiscal year. So if you would follow me please to Page #4 of our presentation. I think the first 9 months, in particular the last 3 months, this actual quarter has been characterized by this deteriorating macroeconomic environment. Nevertheless, and despite of that deteriorating macroeconomic environment, we are happy to report again a strong set of numbers, actually, showing further growth and margin expansion for the group. Our megatrends remain intact for Jenoptik. The digitization of our world goes on. Healthcare systems around the globe do need more effective and more efficient systems, and we all need more, smarter ways to get from A to B. So Smart Mobility is a mega trend that helps us. For us in particular, and in particular the last couple of months, important, is that we do continue to see it could be more in the semiconductor equipment area as well as in core biophotonics arenas for us here at Jenoptik. As a result of that, as I said earlier, we can actually report a positive business development, and that's a continuing theme throughout the year. We do see double-digit revenue and margin growth. Our order intake in the isolated quarter, Q3, versus the same quarter last year actually grew by plus 4.3% and sales are up plus 5.2%. Again, that's quarter 3 this year versus quarter 3 last year. As a result of that, our order backlog is actually still growing at a very high level and book-to-bill, despite the fact that we grow significantly, is above one. So we still build backlog even of the first 9 months of this year. I'm particularly pleased to see that our operating profit expands and continues to expand. Our operating profit margin, our EBITDA margin, again, in the isolated quarter, is up by 30 basis points versus the same quarter last year. And for the year after the first 9 months, it's up by 170 basis points. And as a result of that ongoing margin expansion, we raised our EBITDA margin guidance to now around 19.5% of sales for the fiscal year. With that said, I'll hand over to Prisca, and Prisca is going to take us through the numbers in much more detail. Prisca?

Thank you, Stefan. Good morning, everyone. So let me give you some more color on our financial performance in Q3. First of all; however, let me reiterate what Stefan has said earlier. Overall, if we look at the world economy today, it is clear that the macroeconomic environment has deteriorated over the course of the fiscal year. However, in spite of this, at our company, we've seen continued positive business development throughout the first 2 quarters, with a healthy double-digit revenue growth and yet again overproportionate profit expansion, which has also enabled us to raise our margin guidance for this year. Now let's look into our performance and group level, starting with market demand on Page 6. Order intake in the first 9 months came in at EUR 835 million. This denotes a solid level, I will say, down 6% compared to the strong prior year period. In the third quarter, order intake was up by around 5%, thanks to big orders received by our Non-Photonic Portfolio Companies. As you can see here also, book-to-bill ratio on group level remains at the same level compared to H1 '23 but has reduced somewhat over the prior year. Looking across our businesses, you can see that each of our segments reports a book-to-bill ratio above 1. As Stefan mentioned earlier, our order backlog continued to grow and that remains on a very high level. It was up by around 8% compared to the end of last year, which again provides us for a strong basis for the coming quarters, especially since order backlog has increased in each of our segments year-over-year. Now we expect to convert roughly 37% or, in absolute terms, EUR 290 million to EUR 300 million of this backlog into revenue within this fiscal year. Now turning to revenue and profit development on Page 7, please. Looking at the left graph, you see that for the first 3 quarters, we saw strong top-line development with revenue up by about 10%. We had no effect from portfolio changes for this growth material organic. FX had a minor negative impact on top-line development. The main growth drivers in this period were both our Advanced Photonic Solutions division, which posted low double-digit growth, and our Smart Mobility solution division, which posted high single-digit growth, whereas our Non-Photonic Portfolio Companies grew mid-single digits. From a regional perspective, each of our regions reported higher revenues, most notable Europe with plus 15% and Asia Pacific up 12%. Our share of revenue outside of Germany remained stable at around 3/4 of our total revenue. Moving on to profitability on the right side of the slide. As you can see, we have improved our profitability and the strong top-line growth converted into a substantial profit and margin improvement. Group EBITDA in the first 9 months of 2023 came in at EUR 142 million. EBITDA margins, as I mentioned already earlier, was up markedly by 170 bps, driven by both mix and scale effects. Looking at profits from a divisional perspective, the main contributor in actual terms was our [ APS ] division and also the turnaround of our Non-Photonic Portfolio Companies contributed significantly. As you know, Stefan will go into our divisional performance in greater detail a bit later in this call. Now moving on to the P&L on Page 8. Here, I would like to give you a little bit more detail on the drivers behind this margin growth. First of all, we saw gross margin expand 60 bps year-over-year, driven by strong top-line development growth at APS at broadly stable margins as well as gross margin improvement at our [ NPPC. ] Looking into functional costs, as you can see here, we remain disciplined in our OpEx despite our continuous investment into R&D. As a consequence, functional costs are growing at a rate that is significantly lower than our revenues. Now let me briefly explain what's going on into our other operating results. Here, we have [indiscernible] EUR 6 million year-over-year for 2 main reasons. We recognized some losses relating to FX compared to a small positive effect last year. And secondly, as you already know from H2, we took an impairment charge of EUR 4 million in connection with the sale of our 33% stake in [indiscernible] which have already reported at half a year. Our EBIT came in at EUR 88 million for the first 9 months, up considerably at 29% year-over-year. For the first 9 months, financial results stand at minus EUR 11.5 million. This primarily reflects the gentle rise in interest rates. However, let me use this opportunity to remind you that our exposure here is limited as approximately 2/3 of our debt is fixed rate. Finally, earnings per share of EUR 0.94 are up 32% versus 5-year figure. So overall, we reported solid earnings for the first 9 months of '23. Turning to Page 9. Looking at cash flow. We made good progress versus last year. Operating cash flow pretax is growing a similar dynamics of EBITDA despite some investments into working capital, where for sure, we have some more work to do. We are continuing to invest into our capacities. Accounting CapEx was up by EUR 12 million year-over-year. However, it may be counterintuitive maybe to see investment cash flow to be somewhat down year-over-year, so let me explain that. There are 2 aspects to that. Firstly, of course, not all of our accounting CapEx has a cash relevance to our lease agreements, for example. And secondly, some of the interior fittings and installations related to the CapEx for our new facility in Berlin has been transferred to our landlords in accordance with our lease agreement, which has led to a onetime inflow in our cash flow statement. Net debt slightly increased versus end of last year due to dividend payments in June and tax payments which are not included in the free cash flow. So our leverage now stands at 2.3x compared to 2.6x at the end of '22. And with this, let me turn it back to Stefan to our division.

Yes. Thank you, Prisca. And as always, it started with our APS or Advanced Photonic Solutions business on Page #9 of our deck. As you can see in the presentation, revenue has grown again, and first I pointed this out already earlier, low double digits. So we have an 11.1% revenue growth after 9 months in this business. And I think it goes as saying that we're really proud of the -- of that result, in particular, in light of the fact that our factories have to run pretty hard actually to produce almost EUR 600 million in sales in the first 9 months this year. Despite that strong sales growth, our book-to-bill ratio is still above 1. Order intake is down by minus 8.9% after the first 9 months but again, down from a very high prior year level. So the comparator here is really, really, really challenging. And I think it's fair to say that overall, with EUR 622 million order intake after 9 months, we can report a continuous and ongoing strong demand in most of those businesses that are grouped together under APS, and in particular and I know that's most interesting to most of you, in particular, in our semiconductor equipment business. As a result of the top line growth and more volume and, of course, also a better mix, we do see margins again going up, operating margin. There was a onetime effect in this EBITDA number. But overall, it's really just a volume and mix effect that drives up the margins and EBITDA. The rest of -- at least the profit in the business. Margin in percent of sales is down somewhat from a very high level of last year. But again, overall, very happy with the performance of APS in the first 9 months. We go to Smart Mobility Solutions. Here, revenue is up as well by not quite almost 10%, 9.1% in precise terms. Order intake is down, but please let me remind you of the fact that this is a project-driven business so you have lumpy order intakes. We don't see an underlying trend of any kind to sort of -- to see reduced demand or anything like that. It's just the lumpiness in that business. Here as well, book-to-bill is still above 1, so our backlog again grew also in the Smart Mobility division. I think what's maybe a bit surprising that we see EBITDA going down in Smart Mobility. In Smart Mobility, we do have actually 2 effects going on. One effect is a mix effect. We make more sales currently with projects that come in at lower margins. That's to do with a particular project that we have going on down under and a lot of smaller items. And at the same time, we do continue to invest into our sales force in a strategically very important market. In other words, we continue to invest in building up our own sales force in North America, which, of course, in the future should lead to not only just higher sales but also higher margins because then we would be able to actually capture the service business also North America, which we compete at the moment. With that, we'll go to Non-Photonic Portfolio Companies. It's actually nice to report those numbers here. We all are a bit nervous about those businesses in NPPC but it's nice to see the numbers going up. It's nice to see strong order intake growth in the first 9 months of this fiscal year, in particular, though, driven by a onetime large project that we booked just recently in this quarter for Prodomax. Now to manage expectations, at least somewhat, let me remind you that in quarter 4 of last year, we also booked a large order for Prodomax. So if you build your models, don't assume that the order intake here will continue to grow with almost 30% but to assume that we have a strong market recovery, in particular for Prodomax but also for Hommel. Revenue is up mid-single digit, 4.5% to now almost EUR 90 million from, granted, relatively low basis of last year. Nevertheless, if you see that results into a strong margin expansion, so margins are really up and EBITDA is at EUR 12.2 million in the first 9 months, again driven by more volume but also by the fact that we actually stopped the bleeding or closed the loop, if you want, with INTEROB. Again, let's not forget that last year, we had significant downward sort of drag from INTEROB and a particular project to do with electro-mobility in a -- for a factory in near Berlin. And that's gone and so those margin draggers are out of the business, and we can now actually do see the underlying strength of both Hommel and Prodomax. With that said, let's have a quick look into sort of the remainder of the year. And as we pointed out earlier, we do raise our margin guidance based on the strong margin expansion that we have seen thus far year-to-date. We are now expecting EBITDA margins to come in around 19.5% of sales. Sales, we maintain our guidance. We do still believe that and forecast that we come in somewhere between EUR 1.050 billion and EUR 1.1 billion. And we do point -- want to point out that capital expenditure will be higher than prior year, and prior year was at EUR 106 million. So overall, we do invest into our organic growth, in particular, for our APS businesses and that does cost money. However, we are trying to manage that as careful as possible to also make sure that we sort of have a very close look on our ROCE. We do understand that ROCE is very important, but we also need to invest and want to invest into growth in our core businesses. And in particular, in semicon, we all know that there is a discussion out there to what extent semicon in 2024 might be sort of somewhat flat. And in 2025, it will grow again for the business overall, for the market overall. For us, and we -- some of us have discussed that in the past. For us, we do see continued good demand from our customers. We do not sell to semicon producers. We sell to large machine builders that build semicon machine or semicon production equipment. I think we can discuss that in more detail in the Q&A session. Most importantly, again, we maintained our sales target for the year and our revenue guidance for the year, and we raised our margin guidance to now an EBITDA margin of around 19.5% of sales. So with that, let's pause here. Thank you very much for your attention, and we look forward to your questions.

[Operator Instructions] And the first question comes from Adrian Pehl of Stifel.

First of all on the APS segment, actually, on the CapEx side of things. I mean, I would have expected you to spend a little more until the end of the 9-month period. So I'm just wondering if you could say a few words on what we should expect, obviously, for the fourth quarter and are some CapEx portions just spilling over into the next year? And then a second question, obviously, given that the order intake situation has been quite solid in the quarter. I know you're not guiding quarterly order intakes. But is there anything that should make us believe that there will be a different momentum in the fourth quarter on APS order intake? Maybe we'll take these 2 and then I might have some follow-ups.

Yes. Thanks very much for your question, Adrian. On the CapEx one, I'm looking at Prisca, but I think we do see some delays in our CapEx here and I would expect -- or I wouldn't be surprised if you see some spillovers into next year, but Prisca...

Yes. So thank you, Adrian. I fully concur. When we built -- when you build big projects like we do interesting, for example, it's always hard to exactly forecast in which quarter which amount goes. That's partly natural. I want to reiterate, we are fully on the time plan but there's no delays from that. But there is some volatility, of course, from our CapEx estimates for this year versus next year. So I agree with Stefan. Some of it we will see potentially moving to the first half of next year.

And on the order intake, and again, let me point out that Prodomax issue, we did post a very large order for Prodomax just a couple of weeks ago. So in this quarter, quarter 3 and last year, we had a very large order in Prodomax in quarter 4. So I would expect some normalization effects quarter-over-quarter for NPPC segment. On APS, I don't see any particular sort of changes. We are still in discussion with our partners on AR VR front. Still discussions, no solid order intake this quarter. And whether that is something is going to come next quarter or next year, nobody knows at the moment. It's hard to tell. But in most other segments, basically no significant change versus the last couple of months, I'd say.

And then a quick question of understanding. Prisca, I think you said you expect to turn out of that backlog that you have EUR 290 million to EUR 300 million into revenues in Q4. So I'm not sure if we should see that as kind of narrowing the guidance on top line a bit. But on the other hand, you should have some business, obviously, that you take in Q4 and you ship in Q4 to some degree. So how should we see it? Is actually the revenue more than EUR 300 million, we should expect for the fourth quarter. And the second question -- sorry, go ahead, please.

No, please. Sorry, I just wanted -- so I think you shouldn't read more into that than that we roughly want to convert this 37%. And if you do the math, you'll see it more or less close to the midpoint of our current revenue guidance, right? And we are not narrowing the guidance. Today, as Stefan has reiterated, we keep our revenue guidance impact so I wouldn't work more into that other than we are confident that we convert 37% roughly into revenue this year -- or this quarter.

Okay, got it. And on the APS margin, you also said that the margin obviously is a bit down versus last year. I was just wondering, is that because there will probably be more questions on TRIOPTICS later on in the conference call? Is that something solely attributable to TRIOPTICS basically and the other parts of the APS business is doing just fine or even better? Or how should we think of it?

Let me get started and maybe Prisca can point here. TRIOPTICS is an issue because they are not at the same sales level as anticipated, and we did dial in costs to prepare for the growth we are expecting and the orders we're expecting, in particular, AR, VR. The underlying base business of TRIOPTICS is strong and intact and it's fine. But it is taking margins down if we dial in more OpEx, obviously, and more cost. So TRIOPTICS is an effect. We also have effects in the other businesses, predominantly or namely the biophotonics arena, I think, is some parts under pressure. In particular, there's aesthetic procedures we talked about in the past. They come in lower and since this has a fairly steep function of sales to cost, we do see margins under pressure in that area as well, I believe. Do you have any sort of addition to that?

Maybe only 2 more data points to add. If you look at isolated margin for Q3 last year, they were fairly high. We also take a high comp into account, which is about 23%. And then I would say secondly, reiterating what Stefan said, the other businesses were broadly in line with our expectations. We do have mainly driven because of the sales top line development, the development at below our expectations, and that has an impact as well.

All right. And then very last question from our side before I jump back into the queue. A bit more strategic one in thinking about your portfolio. So given nice performance, good order intake of Prodomax, is that not the right time to sell the asset, while at the same time, probably businesses which might be complementary to APS have a good price tax? So to use the money for M&A to complement that segment? Is that something you're thinking about or is it not the case at the moment?

Adrian, thank you for your question. At this moment, we are not going to discuss that Prodomax future anymore in any detail, and please do understand that.

Your next question comes from Craig Abbott, Kepler Cheuvreux.

Most of my questions obviously were just, in the meantime, answered. Two follow-ups, I guess. Okay, just following up on that very last one. You said you're not going to talk about Prodomax, but I mean, any general thoughts beyond that? I mean, you also have Hommel. You have safety business you might have rethink about. I mean, I appreciate you have the Capital Markets Day coming up in the next couple of weeks. Maybe you want to simply refer to that. But some general thoughts on what you're thinking strategically at the moment would be appreciated. And the second question is just simply, you've said a number of things on TRIOPTICS but like could just be a little bit more specific with regards to the base underlying business. I appreciate the AR/VR business has not yet come through. But on the basic smartphone-related business, we've seen more positive industry news flow here in the last few months. And if you could at least give us some indication, have you seen the stabilization now in that order intake? If you could give us some light there, that would be appreciated.

Sure, Craig. And let's start with the TRIOPTICS question. The underlying base business continues to be intact like before, flat, I would say, like always before, actually. The strong growth in TRIOPTICS last year and the year before stemmed from AR/VR actually. At that time, we booked large engineering orders and engineering revenues for AR/VR. The underlying base business, as you point out, with cellphones but also with like just classical optical metrology is stable business and will be. We don't expect that to grow like crazy nor do we expect that to decline big time. It's a fairly stable business. I mean, TRIOPTICS is not a new startup. TRIOPTICS is in business since 1991. We all have TRIOPTICS machines in our optics factories. We do or our competitors do. That is a stable business, and that stable business continues to be a good business with good margins. The growth in the last 2 years were driven by engineering orders for AR/VR, which are not in our books this year but we fully expect them to come in the years to come or in the quarters to come. It should be more -- couple here. But baseline business is fully intact. On the other issue, I mean, we did point out in our last Capital Markets Day and our strategy for 2025 that we have the intention to reduce our dependence on automotive business, in particular, on automotive business that are nonoptical. And we have the intention to focus our investments on growth in our optics, in our core optics businesses. And we still have that intention. And we still want to do that. And yes, we're not going to comment any more on Prodomax. And Hommel is a mixed bag. As some of you know, in Hommel, we have a certain part, that is actually optics. We have combined Hommel by now already with obviously part of the Hommel product line with [indiscernible] for an electronic business that we have there. So our strategy remains intact.

The next question comes from Martin Jungfleisch, BNP Paribas.

Two please, on the orders and APS. I mean, can you provide some color on the order composition by region and by industry in APS in Q3? Was the decline mainly driven by semi and TRIOPTICS in Asia or was there anything else? And can you highlight some changes that you have seen quarter-on-quarter on the composition, if there was anything meaningful? And then secondly, adding to that, orders at your main customer were quite soft in Q3, where they also expect 2024 revenues to be flat now. Can you comment a bit if the softer orders at ASML have already led to a bit of softer order intake on your side in Q3? Or would this come with a time lag of a few months, given different lead times?

Yes. Thanks for your questions. We are not commenting on sort of details in individual product lines. I think please do understand that. I think we give you as much color as we can between the divisions and sort of at least qualitatively, I'd say we don't see a major shift quarter-over-quarter. That was one of the questions. So please understand we will not go into the details quantitatively. But qualitatively, I think we could say that we don't see a major shift in the pattern quarter-over-quarter at the moment. Obviously, we cannot comment on ASML that you can say about these questions. We can comment on what our -- in what we see with major customers in the semiconductor manufacturing area, which is some of the -- one of them, you may have mentioned and we have others, it's important not to say. There's also other customers there. But yes, it's our main customer. Nevertheless, the effect that we have, I always compare our customers to like sort of a bit of a reservoir, if you want. If they see order intake fluctuations, that doesn't mean that it results into them ordering more or less from us because they also know that they have long lead times. We have long lead times. We have frame contracts over years. And they're preparing for growth in 2025. You see a flat 2024 and growth in 2025. Basically, that means they have -- and they do continue to order from us because they need to continue to build their machines to prepare themselves for a huge growth in 2025. So this is basically the effect that we have. Fluctuations in the demand for machines itself do not automatically correlate with fluctuations in our order intake. And those are big tankers basically, big reservoirs that can filter out the demand fluctuations on their end simply because of their size. And I hope that does explain a bit. There's a question that we get fairly regularly actually. I know it's a bit sort of counterintuitive, and not easy to sort of understand at the first place. But yes, essentially, fluctuations in the demand of our large customers, whether up or down, doesn't translate into one fluctuations on our end.

The next question comes from Mr. Michael Kuhn, Deutsche Bank.

Essentially, left and you already commented on it during the presentation. Quite a substantial margin decline in SMS in the third quarter, and you mentioned project mix and also the buildup of your distribution organization in the U.S. Could you quantify both effects and maybe let us know what amount of fixed costs you have added for building up the U.S. sales force? And maybe also give us an update on where you stand. How much of this implementation has been done? And from which date onwards you would expect bigger order wins again in the U.S. and that business to pick up and also improve the profitability?

I mean, obviously, the total effect, you can see on Page 12 of our presentation. That's the sort of the effect of both -- or the total of both effects. We will not -- cannot disclose or don't want to disclose the sort of the composition of that. But the total effect you can see on Page 12 of the presentation. When it comes to this effect in North America, we are making good progress there. We do start to get -- take orders in, smaller ones though, at the moment. And we're actually okay with that because we do want to start with smaller orders first. We want to make sure that we are not sort of fumble the ball here by trying to take big, big projects on ourselves right from the get-go. So at the moment, we, in particular, in the U.S. go for more smaller orders, smaller projects, more local projects so that we can anyway learn to run that business ourselves in this organization. Now just to be clear, we do that type of business in lots of other parts of the world but not in the U.S. So for our U.S. organization, it's new colleagues and we want to make sure they're -- as I say, we do not fumble the ball on that one.

Maybe I can add to that. Maybe to on a little bit higher level view. Yes, you're right. We have seen a margin decline. However, keep in mind that margin variability by quarter in SMS is very high, which is if you look at, let's say, for Q3 numbers this year last year, right? So that's one data point. Stefan already mentioned that we are, revenue-wise, maybe slightly lower than last year. On the other hand, we also see the mix effects that Stefan has mentioned, which we will always see quarter-by-quarter and they can impact positive and negative effects. So I would lead you to look into year-to-date or LTM numbers for this business. I think this is more accurate than looking on a quarter-by-quarter basis. And then I won't comment again on the U.S. as Stefan has already covered that. But maybe that gives you some flavor. And obviously, we expect this effect to be temporary, but we cannot give you a quarter-by-quarter future view on this business.

And then maybe as a follow-up, as you mentioned this Australian that diluting the margin. Is that, let's say, a contract that was signed in the expectation of a lower margin or is this contract underperforming due to some reason?

Looking at each other, if you give a short answer to the question. It's a bit underperforming. I will put it that way.

Yes. I think maybe to add to that but don't read too much into it, we have a broad business across a lot of regions, right? I think this is more meant as one example of mix changes that we do see. So please take it in that context.

Excellent. And then one more on APS. During the presentation, you briefly mentioned a one-off effect. Is that something from a -- in the 9-month number? Is this something from the previous quarter or was there any new one-offs included in the third quarter?

No, it was already in the second quarter, low to mid-single digit million, if you remember.

The next question comes from Lasse Stueben, Berenberg.

Sorry, last question on APS, order intakes and promise. You mentioned the framework contracts that you have with your customers. And I suppose you have good visibility on the volume within that contract over the time period. So I'm just wondering sort of what visibility do you have now based on your APS order backlog? Is that kind of stretching until the end of H1 next year? And how consistent is the cadence of the call-offs within the framework contracts usually? I mean, is there quite a big fluctuation on a quarterly basis? Or does it tend to be quite evenly staggered within the structure of the contract?

Lasse, I guess the best way to answer is we do not see any significant changes here. It's the same pattern that we had in the last years in -- we have, yes, full stop, I guess. Same pattern. We have the same amount of visibility that we actually always had so our large customers in this area did not change their ordering behavior towards us. And I'll say that one more time. They did not change their ordering pattern towards us recently. Yes, I hope that answered your -- I actually hope that answered the question. If not, I mean, please do follow up, but...

That's fine.

The next question comes from Malte Schaumann, Warburg Research.

Yes. Not much -- Maybe a follow-up on TRIOPTICS again. Do you already see headwind at earnings level from an underutilization? Or is that something you expect to become more severe in the coming quarters and should be kind of expected?

No, I think the headwind comes more from us having dialed in more resources for the expected growth. I think that's a better way of saying it. But you can turn it around, of course, if you want, and that you can also call that underutilization if you want. But we have raised the amount of headcount there and invested into growth. And that's where the -- that's what drags down margins.

Okay. So that's [indiscernible] become much different than -- the next few quarters?

I would agree to that, yes.

No, okay. And then maybe also on APS order dynamics. I mean, obviously, I think Q3 has been the first quarter with a book-to-bill ratio of below 1. And that segment, I think, which is understandable given the growth, you have the strong order backlog you build up and then seeing some big wins here and there. I mean, is that something that one should expect for the next few quarters as well? Probably as you said, trends, patterns are not really changing at the moment, so we can give a qualitative comment when you might expect order dynamics to change more positively again.

That's a fair observation. I would -- there's a part of me saying I hope that, that continues because that means we continue to sell as much as we do, and all factories are continuing to be productive as much as they are at the moment. Of course, we do want to see growth but in all those as well. So it's a bit hard to say because it depends on the development of order intake in the next few quarters, which we do see, let's say, in a stable manner. And obviously, we hope that we can continue to grow sales. That would mean book-to-bill below 1. So hard to tell because we're sort of on the edge here. It's not a clear -- it's not as if this is much below 1. But I hope that answers the question. It's, again, not a significant change in any order intake pattern, pushing sales out of the door fastly as far as we possibly can. And to what extent that balances out over the next few quarters we have to see.

Sir, at the moment, there are no further questions. [Operator Instructions] There is a follow-up question coming from Adrian Pehl, Stifel.

Just a very quick follow-up question. On the order backlog, would you share with us the portion in there which is fine for delivery in 2025? Is there already a sizable number included there?

No, I don't think we specified that at this level.

[indiscernible] you can assume that our order backlog is phased in a way that the majority of the orders are closer to home, right, without giving you specifics. But no, we cannot sort of give you the specifics on a quarter or fiscal-year basis.

So, there are no further questions at this point. And I'd like to hand it back to the speakers for some closing remarks.

Yes. Thank you very much. Thanks for being with us today. Let me remind you on the Capital Markets Day that we are going to have in a few weeks. Looking forward to seeing many of you in Berlin. And I guess we will have more time to dive deeper into our businesses and to our growth expectations, into our margin expectations midterm during the Capital Markets Day. Thank you very much.