Kongsberg Automotive ASA (KOA) Earnings Call Transcript & Summary

Good morning, and welcome to the Kongsberg Automotive ASA First Quarter 2020 Earnings Conference Call. With me today, I have the President and CEO, Henning Jensen; and CFO, Norbert Loers. With that, I would like to hand it over to you, Henning.

Thank you, operator, and welcome to our Q1 2020 earnings call. Let's get going right at it and start with Slide #3. I think we're all aware of the coronavirus, and not just aware, but we're sort of feeling it in our personal lives as far as limited freedoms, as far as movement, as far as social distancing, as far as home offices and, unfortunately, also as far as factories that are shut down in many industries across the world. Obviously, this is also hitting the automotive industry hard, and I would almost say that it's hitting us harder than most. The rationale for that is that the automotive industry has complex supply chains, which are very global in nature. And as such, the whole industry is very dependent on such supply chains functioning well. And once they don't, which is the case right now, in conjunction with all the health concerns and all the restrictions on movement and social distancing, et cetera, it becomes a very, very difficult situation for the industry. That being said, as we speak, for all practical purposes, all the western OEMs and many Asian OEMs are no longer operating their OEM assembly plants. Some have actually started to reopen very carefully at very low volumes. That is particularly the case in Europe where companies like PSA, to a very small degree, Renault, Volkswagen, Daimler and also Toyota have started up slowly but securely, but at very, very low volumes in order to get things going again. That being said, the great uncertainty is, obviously, how long this shutdown or effective shutdown period is going to last and, last but not least, what kind of ramp we're going to get afterwards and what kind of economy and demand we're going to face after this. The greatest here is obviously that what started out as a health issue turning into a supply chain issue ultimately turns into a demand issue. On the good news front, the assembly plants in China and South Korea are, for all practical purposes, reopened and operating, I would say, almost as normally. I'll get a little bit more into that once we start getting to some facts and figures as far as revenues. We saw effects from corona already in Q1. We obviously saw it strong in February in China and South Korea. And also, in the last 1.5- to 2-week period of March, we also saw that in other regions of the world, first in Europe, and then that very quickly went over to North America as well. This obviously has some very strong effects on Kongsberg Automotive, not just on the automotive industry in general. We are predicting that we're going to have very sharp revenue declines, primarily in Q2, but also for the rest of the year. And as a result of that, we have basically estimated in what kind of ranges such impact could be and what that would lead to for Kongsberg Automotive and, conclusively, what kind of liquidity need we would have as a result of the coronavirus. We were in pretty good shape prior to corona. We felt that we were really getting the curve. We were strong -- growing stronger than the market. We were investing pretty much our entire positive cash flow from operations into future growth, and we're getting into a pretty good position. Then came corona and things completely changed around. That obviously leads to a liquidity need for the company. At the same time, it has led to multiple actions. We have been early out, earlier than most, I would say, as far as stopping incoming material in order to conserve cash. We have, to a certain degree, reduced and, to a great degree, delayed some CapEx spending. We have, give or take, 2/3 of our employees in furloughs or short-time work or the likes. And we have also increased our credit facility by EUR 20 million, although we have not drawn additional compared to earlier. We've also said that our liquidity need, given the coronavirus, within the ranges that we are assuming, and there's a lot of detail on this in some presentations that we posted. We basically presented a liquidity plan, which includes partly some degrees of lending, some degrees of factoring as flexibility. But first and foremost, it includes a capital raise, and we are in the middle of that process as we speak. In that conjunction, I can only refer to the press releases and the stock exchange releases that we've made both as far as describing the situation and as far as the investor presentation that we're using in road-show activities this week and last week. If we flip to Slide 4, let's get into the real topic of this call, which is Q1 2020. Overall, our revenues declined 15% year-over-year to EUR 262 million. FX effects were very small, actually almost negligible. The revenue shortfall compared to our guidance back when we announced our Q4 results are essentially driven by the corona-related North American and European revenue declines. As you may remember, we already had in a coronavirus effect for Asia in our previous guidance. If you look at revenues in China and South Korea, and for that matter, off-highway, industrial and the aftermarket, we were down about 5% year-over-year. And OEM automotive revenues outside of that declined by around 18% year-over-year, and that was obviously a very, very strong effect in the second half of March. Let me give you a little bit of a framework or a flavor of what happened in China and South Korea, which is actually much less negative than what I would have thought looking at what happened in China. In the month of January, in the combination of China and South Korea, which behaved very similarly, we were actually up 1% on revenues for the month compared to last year. In February, we were down 21%, which to me is somewhat surprisingly small amount. And then in March, we were actually flat, or to be more exact, we actually had EUR 30,000 more revenues in March in China and South Korea this year than we had in the same quarter last year. So that recovery has been very, very fast. Whether that is sustainable or it's pent-up or it's for inventory is very, very difficult for us to understand, but that the recovery rate and pace has been faster in China and South Korea than we are predicting it to be in Europe and North America. That is for sure. And the primary reason for that is that there are more complex supply chains for North America and Europe than there are for China and South Korea. They are more self-sufficient. And also, there's a lot of cross-the-Atlantic type supply chains that make it difficult because you're dependent essentially on the health and the coronavirus status in various countries to basically recover to stages where you start opening factories again in all countries before you can really get volume production at the OEMs. A little positive note as far as Q1. There's a lot of uncertainty in the market, however, we did have very strong new business wins. I'm going to get back to that to a later chart, although I got to admit that pretty much all our new business wins took place in January and February. In March, the purchasing department at our customers were busy mostly with other things for natural reasons. From a performance standpoint, we earned EUR 7.8 million worth of adjusted EBIT, which is significantly lower than what it was last year. Again, no significant FX impacts on the adjusted EBIT line. From a cash flow perspective, total cash flow for the quarter, if you include absolutely everything, it was minus EUR 8 million, and that includes the FX effects on the balance sheet cash. In terms of operational cash flow all in, it was minus EUR 6 million, significantly better than our previous guidance. Normally, due to seasonality, Q1 is a very strong negative cash quarter. This year, it was a bit different, obviously, primarily driven by lower sales, which lead to lower revenues, which lead to lower receivables, and that gives you a benefit on the cash flow line. From a gearing standpoint, obviously, the gearing also worsened. We ended up essentially with an adjusted gearing ratio of 3.5. And excluding IFRS 16 effects, the gearing ratio was 3.0. If we go to Slide 5, this sort of breaks with the trend lines of the past. So as you can see, our adjusted EBIT ratio was 3%, so the low point for a Q1 over the last 4 years, not surprisingly. And also on the left side, on the revenues, this breaks with our growth trend, generally speaking. Flipping over to Slide 6, you basically see a continuation of those trends on both absolute EBIT and net income. Note that the difference between the adjusted EBIT and the EBIT is getting very, very small as our restructuring activities are coming towards an end. Flipping over to Slide 8, which is new business wins. I alluded to that earlier. We had a strong Q1 as far as new business wins are concerned. And if we look back towards 2019 and 2018, it was actually the strongest first quarter we had on new business wins since more than 2 years. So there is some paradox to that. On an annualized revenue basis, that amounted to EUR 100 million, give or take. On a lifetime revenue basis, that amounted to approximately EUR 500 million. The relationship between the 2 indicates that the average length of our programs is approximately 5 years. If you look to the bottom right-hand corner of Slide 8, a little bit more than EUR 1.6 billion in terms of lifetime revenues awarded LTM, very, very strong figure. This obviously assumes that markets are operating in a normal fashion, which they are not right now. But relatively speaking, this will help us to still outperform the market as far as growth rates going forward even in a corona scenario. Flipping very quickly over Slide 9, that's basically the distribution as far as the business wins by segment, which is a very similar type of trend from what we have seen earlier. Flipping over to Slide 10, that shows our book-to-bill, book being our awards and bill being our revenues, and this is in an LTM fashion. And as you can see, the curve actually goes significantly up in Q1 2020. That is partly a result of the new business wins this first quarter being stronger than last first quarter. But primarily, that is a result of the denominator being smaller. So sort of my house number is, we have a book-to-bill sort of weighted average over the last 2, 3 years of somewhere in the 1.4 range, which is something that we're very comfortable with. Getting to markets, Slide 12. Markets are declining. These are preliminary figures. There are no actual figures out yet. They're starting to firm up as far as the fourth quarter of 2019. As far as the first quarter of 2020, these are still estimates. My expectation is probably that these will fall even more than this. As you can see, there's a high correlation here to the number of days worth of corona closures that took place in the various regions for the passenger car volumes. Europe shut down a little bit before North America shut down. They have a stronger decline year-over-year than North America. South America was basically somewhere in between. China was obviously very affected, and that is because they had more or less, I hope I'm right on this one, the entire corona effect taking place in Q1. And as far as the rest of Asia, they were less hit than Europe, but a little bit more than North America, and rest of world basically being pretty much on track with Europe. The same pattern, give or take, is taking place in the global truck production, although there are some different dynamics there. At the end of the day, the same type of trends there, although the decline versus last year is a little bit stronger, which was expected in the first place, primarily driven by new emission standards being introduced in North America. Getting to Slide 14. That is just a quick overview as far as all our segments, and I'll get into more detail. So I'll flip straight into Slide 15. In Interior, our revenue decline was actually pretty modest, although our EBIT -- our adjusted EBIT fall was stronger than what the revenue decline indicates. That is related to the ramp-up of a new facility in China that we have. Due to the significant new business wins that we've had in China, we've had to expand our operational facilities there. It is primarily the Tesla program that caused us to run out of space in our previous facility. And Tesla China is actually running pretty well, so that is a valuable contribution in these days. Obviously, we had shutdowns in China for an extended period of time above and beyond what's normal for Chinese New Year in the first quarter. The restart actually went well from an operational standpoint. We had some trouble getting employees back on time. As we speak, we have gotten about 90% of our employees back. And we're running at pretty much 90% of what I would call capacity, even though we're flat revenue-wise versus last year over in China. And new business wins, nothing to add to what I said earlier. If you flip to the next chart, Powertrain & Chassis, they are the ones that are clearly the hardest hit from corona effect for the first quarter. That is primarily because they are the ones with the highest percentage of China business. Secondly, they are also the ones the most exposed to Italian and French OEMs. And consequently, they are the hardest hit as far as revenue reductions in the first quarter as China, Italy and France were the countries that were the most affected by the coronavirus for that period. As far as the fall-through on adjusted EBIT, that was, in my opinion, pretty much moderate. The primary reason for it being moderate was that we had some problems in the first quarter of last year related to a launch of a specific program. That obviously did not repeat this year, and then that is something that's helping us a little bit as far as the fall-through versus last year on our adjusted EBIT line. On operations, not much to add to what I already said. Same is true for new business wins. As far as Specialty Products, on Specialty Products, we had a 13.5% decline in revenues. We had a fall-through, which was pretty much in line with what one should expect from that kind of drop. More or less, the entire drop was due to the lost volumes related to the OEM shutdowns. We had a pretty heroic effort in terms of acting before our factories got affected by shutdown-type scenarios as far as getting products out, especially in FTS, but to a certain degree also in Couplings. We are seeing strong industrial market performance in FTS, and we're seeing strong aftermarket performance in Couplings, which certainly comes in very handy in these days of, I would almost call it, free revenue drops. With that, I'll hand it over to Norbert for some financial charts before I get back to a conclusion. Thank you.

Thank you, Henning. So we continue on Page 14 (sic) [ Page 19 ] with revenue and adjusted EBIT development. You see here the drop from EUR 306 million in Q1 last year to EUR 262 million this year by segment. And as already said, P&C had the biggest impact there. I find it noteworthy that Specialty Products increased its revenues versus last quarter last year, while all other segments dropped. If you look to adjusted EBIT, Interior has the biggest fall-through related to additional cost in China, but also to some higher manufacturing overheads with higher depreciation from the investments of the past. Powertrain & Chassis had a very moderate fall-through, and that compares to Q1 last year where we had a significant extraordinary cost from some launches. This was an operational problem that was fixed already, and now we see the benefits with sustainable operational performance in Powertrain & Chassis. Specialty Products, the fall-through is very much in line with the high margins in that segment. When it comes to FX and other, most of the EUR 2.2 million is other, so coming from our other segment. And that is driven by a positive adjustment we had in prior year last year, a prior year that did not repeat and some project costs we had in Q1 that were related to performance improvement projects. On next page, 20, net income development. So the main driver is, first, adjusted EBIT. That did offset EUR 14 million of prior year. In restructuring costs, we have a small gain, and a big impact comes from other financial items. The main driver was FX changes. The Norwegian NOK weakened against the euro and against the U.S. dollar, and due to some large intercompany balances on intercompany loans that resulted in a loss from unrealized currency trends -- an unrealized currency loss of that magnitude. Interest cost remained unchanged to prior year. In taxes, we had before some adjustments on allowances, positive income, but we also had to adjust allowances on deferred tax assets by EUR 6 million, so the net result is tax expense of EUR 2 million in the first quarter. Page 21, total cash flow. You can see here the quarter-over-quarter trend line. This quarter, we had EUR 8 million total cash flow. If you exclude from that the FX effect of EUR 2 million, that then comes to the minus EUR 6 million we show in the chart. As Henning said, main driver on that was working capital. We had lower revenues, lower receivables, but we also could improve our overdue receivables by EUR 5 million, which was a very good result from all the efforts in getting overdues reduced by our business units. Liquidity development is next, Page 22. I'm not talking to all these numbers, but it is also important to notice when it comes to liquidity reserves in Q1 2020, that is adding up EUR 30 million undrawn RCF at the time, plus EUR 27 million of free cash we had at quarter end. 2 days later, April 2, we finalized the agreement with the RCF banks to increase the RCF facility by EUR 20 million. That does not show in the chart as it was post Q1 closure. Final page for our financials is -- no, not the final page. Page 23, net financial items breakdown. You'll see here that the interest -- the unrealized currency effects in Q1 had the biggest impact of minus EUR 12.2 million. And the other one was interest, and we have the interest payment in the first quarter. And we have the effects on IFRS 16 interest payments shown here. Final page now, Page 21 (sic) [ Page 24 ], financial ratios. With the results in Q1, from income dropping a lot, all these ratios moved in an unfavorable way. The adjusted gearing ratio went up to 3.5. If we exclude IFRS 16 effects, it's 3.0. 3.0 is also what would be relevant for covenant testing. Our return on capital invested also went down. Equity ratio went down significantly. On that one, we had a significant FX translational effect in the balance sheet. That accounted to some EUR 20 million of that reduction in equity. Capital employed went also down, very much driven by FX effects compared to last quarter last year. So that's it on financials, and I'm handing back to Henning.

Thank you, Norbert. Just to be a little bit specific on 2 items that Norbert covered. First of all, on taxes, we basically booked EUR 2 million worth of tax expense for Q1. Norbert went through some details on that. There's also, I would say, an overlying great assumption there, and that is our floor for tax expenses for just about any given year is a tax cost of somewhere in the neighborhood of EUR 7.5 million to EUR 8 million. So if you periodize that over 4 quarters, that is approximately EUR 2 million, so that is in line with that. Secondly, Norbert alluded to Specialty Products, which actually showed sequential growth, and that is the only one of our segments that did that in the fourth quarter. Now let's get to the conclusion slide, which is Slide 26. First, Slide 26, it's kind of difficult to wrap up Q1 because the big overshadowing elephant in the room is obviously the coronavirus and whatever effect that will have on us. Q1 was the first quarter where we were affected by that, by the effects of the coronavirus. And obviously, we do expect that to have further significant and greater impact on our financial performance in the coming quarters, primarily Q2, but we will see these effects also into Q3 and Q4. As I said earlier, we put out a lot of documentation, including a fairly all-inclusive investor presentation that basically concludes with our liquidity need being in the range of somewhere in the EUR 90 million to EUR 150 million range and that part of the solution to that is to go through a capital raise worth going through from a road-show standpoint in a private placement setting over the past 2 weeks, and that will culminate with the extraordinary general meeting that we've called for at the end of next week, where we're seeking approval for the transaction as it is built through a private placement. As far as outlook, it's extremely difficult to provide a meaningful outlook these days. The best we can do there is to refer to our investor presentation, which doesn't really provide an outlook or a guidance, but rather, it provides some scenarios and some underlying assumptions behind those scenarios on how we got there, et cetera. So that's probably the best we can do right now, and I hope there is some understanding that our ability to forecast is somewhat limited. Everyone is talking about corona. Everyone is living through the effects of corona, whether it's on a health basis or on it's -- or whether on it's on a -- the economic effects of it. That being said, and I'm hoping that everyone on the phone is healthy, as a company, we've actually been pretty spared. We only have 3 cases of corona within the company, which is statistically pretty low. So that is very satisfactory. However, we're going to get past corona. There's going to be a world after corona. And at some point in time, we're going to get back to normal. I don't think normal is going to happen tomorrow. I don't think it's going to happen next month. I don't think it's going to happen next quarter, to put it that way, but we are going to get back to normal at some point in time. Obviously, within the period until we do get back to normal, we are going to be in a cash-burn situation as is the case for most industrial businesses and certainly almost all in the automotive industry. And through our liquidity plan, we're basically planning to get through that period by being what we believe is fully funded and well-funded, which is actually -- will turn into a little bit of a competitive advantage for us. We're early out. We've taken a hard look at this at a very early stage and taking action fast both in terms of cost savings and in terms of finding additional source of liquidity. And once we get back, we feel that we are still a pretty compelling case. We will be beating the market from a top line standpoint. We will keep the operational discipline and improve our bottom line performance. So looking beyond corona, things haven't really changed, but this is obviously a very, very significant bump in the road, which is the reason for all our other activities. I realize that most of you probably have a main focus not necessarily on Q1, but rather around the activities surrounding our capital raise process. But for not just formal reasons, that is essentially our going through of the Q1 actuals, which turned slightly better than what my expectations would have been from the corona effect. That pretty much concludes our presentation. Operator, if you could poll the lines for questions, I have some questions that we've gotten through the chat lines, and I will answer those. But maybe we can first check out whether there are any voice questions.

[Operator Instructions]

Okay. While we wait for the questions, I'll start with the ones that we got online. First question, I think that's a little bit of a tongue-in-cheek type of question. How long is it before we get some good news to small investors? Unfortunately, I think that if you looked at the capital markets lately, I don't think it's only the small investors that are not getting a whole lot of good news. I think there's generally been a lot of bad news for just about all investors. And I think the world is essentially waiting for some level of stabilization and that we will get back to normal. And once that happens, slowly but securely, things are going to normalize, things are going to stabilized, and that should also lead to some good news as far as investors, but that's a little bit out of our control. Second question is related to our -- the price of our outstanding bond. It states that the current price of the Kongsberg Automotive bond is about 47%, which is correct. Are we intending to buy back bonds to support our bond? Do you believe you will ensure liquidity you need from shareholders? If yes, when do you believe this event takes place? To answer the first one first, yes, the price is 47%. It has dropped sharply, and it has dropped sharply primarily because of the coronavirus effects. If you go back to as recent as the end of February, the price of the bond was actually 100%. So the drop there is correlating extremely well with all those effects. Are we planning to buy back bonds in order to support the bond pricing? Well, naturally, in a time when we are forecasting that we will have significant liquidity needs, we are not planning to buy back bonds. If we, at some point in time, have surplus liquidity and we can buy back bonds at that price, yes, that's obviously something we would look into. But right now, just like any other company, we are basically hoarding our liquidity and being very, very prudent with what we spend money on. As far as the liquidity that we're raising through a capital raise, when do we believe this event will take place? We are aiming for that to take place so that we can essentially close the book prior to the extraordinary shareholders meeting on April 30 and get approval from the shareholders on -- or seek approval from shareholders on April 30, which is Thursday of next week. Next one, and there's a lot of questions this time. I'll try to go through them as fast as I can. Can you comment on industrial/non-OEM shutdowns compared to auto OEMS? What discussions with customers have you had around start-ups in the non-auto space? And is the time frame likely to be different to auto OEMS? How large is the non-auto business for Kongsberg? And is this primarily in the Specialty Products division? First of all, the non-automotive OEMs have less complex supply chains. And what we have seen is a very, very clear trend that the nonautomotive OEMs have a much lesser degree of shutdowns than what we are seeing in the automotive area. Let's put it this way, month-to-date for April, we're seeing in excess of 85% reduction in our automotive OEM revenues. We are seeing less than 60% reductions in, for example, our off-highway revenues, and that is also true for our industrial revenues out of our FTS business unit. As far as the last part of the question, how large is the non-auto business for Kongsberg? And is this primarily in the Specialty Products division? Yes, it's primarily in the Specialty Products division, and it amounts to approximately 25% of our overall revenues if you include the aftermarket revenues in that. On conversations that we're having with our OEMs on the start-ups, they are very tentative. There's a lot of OEMs that contact us and ask us whether we are -- what kind of readiness we have for supplying them with parts. Generally speaking, we have about a week's worth of finished goods inventory on hand. We have approximately 2 weeks' worth of raw material on hand, generally speaking. And we obviously have a workforce that's fundamentally furloughed, but they're certainly very eager to get back to work in order to get full paychecks again. So we feel that we're pretty ready. When the customer says, "Okay, fine, then we'll put something into the schedule." Then we ask the next question, which is, "Well, should we consider that a firm order? And should we start pulling back people in order to produce that?" More or less, uniformly, the answer is, "I will get back to you on that." And they're typically not getting back to us on that. So there's a lot of uncertainty. And obviously, what the OEMs are trying to do is to figure out what the readiness of their supply chain is. As far as our supply chain, we are constantly in touch with our entire supplier base. I would say that, generally speaking, we are getting green lights from just about all of them. The exception is India, which is fundamentally shut down and it's kind of a no-communication-type setting. So we don't know that. The good news on India is it is far away from where we use the end parts and we do have a certain amount of inventory on the ocean, so to speak. So we don't expect to run out of inventory because of lack of supply from India in the short term. Next question is, in your liquidity analysis, and that obviously refers to the investor presentation, you exclude covenant-restricted RCF availability. What discussions have you had with RCF lenders around unlocking this? Essentially, that would mean seeking waivers. The whole goal and the whole parameter around our liquidity planning is that we will not get into covenant testing territory, which happens if we draw more than 40% of our RCF at quarter end. That's the way we want to keep it. If we are in a situation that we're not able to keep that, then we will initiate waiver discussions. My experience is you don't want to initiate those discussions before you actually need to get there. You typically get their waivers. They typically last for 12 to 18 months. If you start having those discussions proactively, you essentially end up wasting some of your time as far as your waiver period on the -- being proactive about it. Going to the next question. What's the situation today in the operations of your business? Do you return to normality? Well, we're certainly not in normality right now. Out of our almost 30 plants, we only have 6 plants that are completely shut down. The others are running at very, very reduced capacity in order to serve, what should I call it, the few customers we have that do demand product and that we see as very important to supply. As far as when we return to normality, that's obviously dependent on when the OEMs get back up and running, more or less, in a normal fashion. And as I alluded to before, the timing of that is somewhat uncertain. Next question. What's the target time line for capital increase and other liquidity raise measures? How quickly we'll be able to conclude the asset disposals, if needed? As far as time line for the capital increase, I think I've covered that, essentially trying to wrap that up before the EGM in order to seek approval from the shareholders in that meeting. As far as the other liquidity raise measures such as the factoring programs, such as supply chain financing and potentially a loan against so-called guarantor assets, we see that being completed somewhere in the June through September time frame. We are in negotiations, and we're making good progress on that. There's a little bit of formalities around it. There's a little bit of IT infrastructures that need to be set up, but we're on a pretty good pace on that. Next question. You said the planned investment level is approximately EUR 100 million for 2020 and 2021 combined. Is such a large level needed to fulfill your contract obligation going forward? The answer is fundamentally yes. It all depends on whether the OEMs delay or don't delay new platforms and new models. Typically, in cyclical downturns, or for that matter, crisis times, those types of model introductions have not been delayed. And the reason is that new vehicles typically sell better than old vehicles and then the OEMs want to get those out. That being said, the OEMs that have the least amount of money or the least available liquidity, every once in a while, they tend to delay a new model a little bit. If that happens, then we will also have a time shift as far as those types of investments. More than 80% of our CapEx budget is related to programs that have been awarded and thus are related to growth. A totally different question. How is Kongsberg preparing for the green shift with a change towards more electrical hybrid vehicles? It's a question we're getting many times. Fundamentally speaking, we are not very exposed to what I would call the modern and very fashionable technologies in automotive, that being automotive -- or that being automated driving or autonomous driving and that's also being electric powertrains. It's a little bit different by segment. But fundamentally speaking, whether the percentage of cars with electric powertrain versus traditional combustion engine powertrain, whether that significantly shifts does not have a significant impact on our overall revenues. If at all, we have a marginal gain if there are more electric and hybrid vehicles. I see. Next question is, I appreciate you can't provide additional comments on new equity raise process at this point. But if you could comment on the later stage with other financing activities, especially on loan backs with guarantor assets and factoring in North America and Europe. I think I did provide that answer. I hope that was to the satisfaction. Did customers of Kongsberg already give positive signals to somehow give support to Kongsberg in these very, very challenging times? Not a whole lot of positive signaling as far as support. Judging from what has happened during prior downturns, it may be that some OEM customers will reduce payment terms to us in a very, very temporary fashion, if needed. We have not entered into those discussions. To the best of my knowledge, just about no automotive supplier has entered into those discussions. At this point in time, it is a little bit premature. It will have to wait until we basically get to the start-up stage and we sort of see how fast things are getting back up to what levels. A question from Sparebank 1, the analyst covering us there, Petter. Can you give some color on China plants versus other plants are performing in terms of how long it was shut down? How large the decline was? Any plants outside of China are performing like the ones in China? I think I gave you the perspective on China and what happened during February, where we essentially only had a 21% revenue drop compared to last year. Right now, I can't really comment on the other ones because we haven't had the recovery, so that's a little bit difficult. As far as next question from Petter is, can you give some color on split between fixed and variable cost in KOA? It's an extremely general question. I think that you can get some of those answers if you look in the investor presentation on the financial slides, where you can kind of calculate to at least a certain degree, based on the projected or assumed revenue declines, what the fall-through is, and then you can take it there. Also from Petter. Also, Kongsberg has high margin on mature programs. How is that mixed in KOA now? Where are you on the vintage curve? Trying to help the investors understand that. I don't think that has changed significantly. I mean, last year, our percentage of new programs was extremely high because we had a declining market, and we had a lot of new launches. This year, I would say that we're very similar to last year in terms of that profile. Not much has changed on that. I would say we have a little bit less launches this year than last year. So if at all, we're going to be a little bit more mature this year than what we were last year. Obviously, from a financial and an operational perspective, that is overshadowed by the overall decline in volume. Secondly, he's asking about -- or lastly, he's asking about, is there more flexibility on CapEx? I think I explained the CapEx flexibility. Give or take, 80% of our CapEx planned is related to programs that have been awarded to us. Give or take, 20% is related to cost-savings measures and what I would call repairs and keeping things going. As to the 20%, we have cut that as much as we can. As to the 80%, there, we are more dependent on the outside. Do you believe the stock is undervalued right now? It's another question. I am not going to comment on whether our stock price is overvalued or undervalued. I have been given a lecture early in my career, and that basically states that the market is always right and don't try to educate the market. So I'm going to stay away from that one. How does it look for the production of masks? Are you able to profit on the masks? Well, the mask production is running. The primary goal of the mask production is actually to supply internally Kongsberg Automotive with masks. So once we get into a start-up process, we are essentially self-sufficient as far as masks and protective equipment. So that's not going to hold us back. We are also able to provide our suppliers with masks if they request so. In addition, we are able to sell masks and we have sold masks to a couple of organizations and municipalities. This is not a big moneymaker. We are not selling medical masks. We are selling masks that are, I would say, in a little bit the same category as you can buy them -- or actually, probably today, you can't find it, but as you can buy them in stores that sell construction equipment and workers' masks. They provide good protection as far as protecting others from you, but they're not surgical masks. So we're addressing a very small market here. So far, we've sold externally about 300,000 masks. Yes, it's a good profitable business, but it's a very limited market, and it's probably a very short-term market. But the ability to be self-sufficient on masks is obviously essential because as our plants start ramping up again, we are very dependent on being able to provide our workforce with adequate protection and social distancing, and therefore, that is a key element of that. If there's more customers coming, we are ready to deliver. We certainly do have capacity to make more masks. Next question. What share price could we expect in the current equity issue? That one, I'd have to refer to our banker and then maybe not even that. There's still a couple of days to go before we potentially launch that transaction, and the price is obviously a result of the book-building-type activity. And I cannot comment on that today. Next question. Why do you prefer convertible bonds rather than a senior bond to draw liquidity? We've had some strong investor interest from a couple of investors, a couple of significant investors as far as whether we could put a convertible bond out there. That's why we're also offering that. Our strong preference is equity capital. Seen from a company perspective, given that some sizable investors were expressing strong interest in the convertible bond, we did put out a convertible bond, and it's a 3-year bond. It has a conversion premium compared to the equity raise price, and it's essentially a 0 coupon bond sold at face value. So for those interested in that, fine. For those not interested in that, I would actually expect the largest part of the interest in our equity raise to be focused on the straight equity. Almost running out of questions here. You'll have to firm up interest or have underwritten for equity and convertible 110 -- 120 before the 30 April. I take that as a question. Yes, we're basically planning to firm up the interest. The planned equity raise is not underwritten. So we're basically going through a book-building exercise, which will start once we launch, which we have not yet announced, but we assume that that's going to happen before April 30. Next question. As April has progressed, have you refined your view on monthly cash burn previously communicated, that EUR 30 million? Or is this figure still appropriate today? Through the road show activities, we have given a little bit more detail on that figure. EUR 30 million is the worst case. EUR 25 million is the best case. So for models, assume that the burn rate at the current level of shutdowns is somewhere between EUR 25 million and EUR 30 million on a monthly basis. Another question. Do you expect aid from Norwegian state? And when will this event take place and at what amount? We are looking at getting government support from a variety of countries, and those are typically the Western countries that we are in, simply because those are the ones that have past programs. Not necessarily in the following order, but we're looking at those types of programs out of Canada, out of the United States, out of Switzerland, out of Germany, out of Sweden, out of Norway and out of the U.K. Those are the primary countries as far as government support programs. To be specific, as far as the Norwegian programs, that is related to essentially only one program, which is related to some coverage of some fixed costs. And in order to qualify for that, you need to have at least a 20% revenue reduction in May and at least a 30% revenue reduction in April onwards. We do see ourselves being in position for being able to get such support. That's primarily in order to get rent support, and it typically covers about 20% of such fixed costs. We are in the process of applying for that for the month of May. And obviously, when those windows open up for the following months and then the following months come in, we will apply for that as well. In total, we are looking at getting somewhere between EUR 5 million and EUR 10 million from government support programs, of which approximately half will -- we foresee to be in the form of grants and the other to be in the form of less -- or very inexpensive loan-type arrangements. But again, there's very little that's firmed up on that. As per today, we have received approximately EUR 0.5 million worth of such government support. As far as other Norwegian government programs, there are -- there is one program that is related to a government-supported bond program where the government basically takes up to 2/3 of the issue. Unless we have to, we're steering away from that program as it's a very expensive program because it's market-based pricing, and that would probably lead to such bond costing us somewhere in the 14% to 16% neighborhood, given the pricing on the current bond. And unless we have to tap into such sources, we're using the other sources of liquidity primarily, and that is also to protect our earnings in the future. Going in with a very expensive bond financing is, I wouldn't necessarily call it a last resort, but it's probably not -- it's certainly not the first resort as far as that. One more question remaining, and that's probably a question for Norbert, and that is what is total liquidity on April 23? 23rd is today.

So we know it as per yesterday, and that's significantly above EUR 40 million. So we are trading -- or we are within the EUR 40 million range, EUR 40 million to EUR 50 million, all of April right now. Liquidity situation as of today is very good.

So with that, operator, did you get any responses to people pressing the buttons and wanting to ask a verbal question?

No, sir. It appears there are no questions from the audio.

Okay. Fair enough. In that case, we are spot on time at 10:01. Thank you very much for your interest. I assume there's a lot of you on the phone that have also had meetings with me over the past couple of weeks in terms of the road show activities. There's still a couple of slots left in that, so I wouldn't be surprised if I talk to some of you in the future. These are very uncertain times. We do appreciate your interest in our company. And if there are questions, I think you know how to raise them, and we'll answer them as best as possible. Thanks for your interest and looking forward to having a conversation with you soon again. Thank you.

Thank you, everyone. This concludes today's conference. You may now disconnect.