Munters Group AB (publ) (MTRS) Earnings Call Transcript & Summary

Welcome to this webinar hosted by Investor Relations. My name is Line Dovarn, and I am Director of Investor Relations here at Munters. And today, we will be focusing on battery and how Munters plays an important role in the battery production. Throughout the webinar, you can ask questions by using the chat function below and we will address all questions at the end. Our first speaker today, President and CEO of Munters, Klas Forsstrom.

So once again, very, very much welcome to this seminar and webinar with our experts and leaders covering the battery segment area. And before we start then into the detail, we are so well positioned for growth. We started to develop this a couple of years ago, and now we start to see the development and the success. In a nutshell, it's a clear strategy for value-creating growth within the Battery segment. It is a transformative segment that is growing year after year. And why are we so well positioned here? It is about our offer. It is about our application knowledge. It is about our service personnel out there. All this jointly makes us very well positioned for growth. And as you know, all of you, we received quite a few large orders during 2022. And I will come in a little bit more in details in a few seconds about that. And last but not least, I mean there is a transformation taking place when it comes to electrical vehicles. It's about carbon dioxide footprint. And here, we are really there to support our customer reach their sustainability targets. Before I hand over to Henrik, let me just repeat a little bit about our larger orders last year. We took SEK 165 million in Q2, it will be delivered during the second quarter this year until quarter 3 2022 -- 2024. And then we took 2 large orders also during quarter 4, and those will be delivered then from quarter 3 this year and then moving in all the way to quarter 4 2024. And with that, I would like to hand over to Henrik Teiwik for taking the next chapter of this seminar.

Thank you, Klas, and we will welcome President of Business Area AirTech, Henrik. Welcome, Henrik.

Thank you, Lina. So first, let me start off by explaining to you why we are so excited about the Battery segment. Our latest forecasts show that we believe the battery demand will grow by 20% to 25% per year by 2030. This is, of course, a large extent driven by the underlying electrification trend in electric vehicles, but we also gradually see this migrating to other applications as well. In addition to this, we also see that the supply landscape shifting from Asia to accelerated growth in both EMEA and Americas. And if we combine all this, there is a significant requirement for additional CapEx in battery production. And this is why we're so excited because in lithium battery production, you need a dry room, and this is where our equipment come into play. And I believe that we are well positioned for growth, but we also need to continue to invest in our organization, both in our capabilities, in our product offering, and also in our production capacity, which we have done and are doing. We opened our new production facility in Hodonin, Czech Republic last year and we have announced -- a number of also investments in Americas and Asia going forward. And as Klas was saying, we have, in the past years, announced a number of large orders. So we're going into 2023 with a very healthy backlog. But in this, we also -- in that backlog, we also have a healthy mix, I would say, of large giga projects, as we have announced, but also a number of smaller battery labs that is being sort of icing on the cake. And on the right-hand side, what is also very pleasing to see is that, that order intake have now also started to translate into our net sales. So on the right-hand side, we illustrate our industrial segment of net sales in AirTech, where you see in the past 2 years that we have significantly expanded our net sales in battery. The Battery business in Munters is supported by what we call the Center of Excellence team. And the Center of Excellence team is actually a team of dedicated experts and affiliates across our organization, across all regions. These experts are -- or have a role to both facilitate best practice sharing, but also cover the full suite of our battery business, everything from application and system design to project management, to service and support. And let us, with video, now illustrate a little bit more on how we're approaching battery in Munters. [Presentation]

Thank you, Henrik. And now joining us from London, we have Federico Tiezzi, who is Director of Battery for our Center of Excellence in the EMEA region. Welcome, Federico.

Hi, Lina. Thank you, and -- first of all, thank you for the invitation for this important webinar. I will do my best to explain why Munters is the leader when it comes to battery application environmental control. It's a journey started almost 30 years ago. And I put here in my slide a project we did in Oxford, U.K., 1996 is still running. So we have a long experience and that is 1 of the most important factor when it comes to this application. And I will explain to you why. The first question is why Munters in the battery application is because the chemistry, the minerals forming the batteries made by lithium ion and is highly sensitive to water, to risk of fire, thermal runaway. And it's not only a safety risk, it's also quality and durability concern, which the battery manufacturer they have to address. So in early 2000, Munters helped the universities, the first labs to establish the right environment, how much humidity and moisture was allowed to have a proper battery manufacturing. And you see in this slide, the journey started back many years ago. In, say, around 2015, with the arrival of a new investor entrepreneurs, Elon Musk in Tesla, they invented the terminology of Gigafactory scale, meaning the dimensional battery manufacturing become a large-scale mass production. And also our unit to control such a huge environment, such big production had to evolve together with these applications. So we invented new product, new options and new features. And nowadays, we are the market leader in this. We control each step of production from, again, the very beginning to the final assembly, even to the testing and the formation and aging of a battery. So we are really providing the full production solution for the battery assembly. Now this answered what Munters can offer to our customer. We call it dry room solutions, and it's basically a product technology around to deliver the perfect environment inside the room, the battery production room. Of course, we start with the unit, ultra high-efficiency Munters' dehumidifier with a large range of options and features to adapt and be able to manage handle specific requirements. You have to realize each of this installation maybe have some differences, different chemicals, different minerals. So this is where we start. But it's not the only, the only things we offer. We offer also knowledge because -- of course, we can produce dry room with a unit, but we need to make sure the dry air -- I mean the dry air is then delivered inside the room. And this is key the distribution -- air distribution, as you can see in this graphics is important, and we need precise and capillary distribution to avoid inefficiency leakage. At the end of the day, what matters is what condition you have in the room. We call it dewpoint, which is basically equivalent to humidity content inside the room. And it's extremely critical. It's a critical application because losing even for few minutes, dewpoint inside the room may require a failure of the batch in production, losing potential millions for the battery manufacturer. How then we can do this? So this answers the question of what we can offer about how we do it. Henrik mentioned the Center of Excellence. So we have a team of experts helping to find the best solutions. And we focus on what is the need of the customer. Each time, we will be focused on the capital investment. And we have products to make them save money, even up to 20% -- 35% of the initial investment or maybe focus on the energy and the running, what we call, OpEx, or mix of them. So the team, the Center of Excellence as they provide what we call the value engineering to help, to make the right choice for this customer. And then the product, I want to focus a bit more going inside the technology because I believe all of you know -- I hope all of you know Munters is -- Carl Munters was the inventor of the desiccant wheel. The desiccant wheel is the engine, is the heart of the desiccant humidifier and we have along all these last years, 10 years, developed new innovative solutions, new ideas, new patented technology. You see here in the screen green-powered purge to improve performance and reduce the energy. The energy exchange inside the wheel is quite important and solution to reduce this energy is critical. It's not only the wheel. It's also what is around the wheel. How are you dehumidifying the full unit, which can be quite a big equipment, up to 5, 6, 10 meters long. So they are quite large unit. So we had to develop in the last 10 years, 15 years [indiscernible] the modular concept. So literally, some plug-and-play boxes to get together to keep the best possible option and features to the customer. We never compromised on performance and quality. This is Munters, if we like. And -- but we want to give optimization. We have to adapt for large-scale assembly. So many -- several hundreds of units to be produced in a certain period of time. And we did that with this invention with our research. So to avoid, again, as you see in the graphic -- in the movie inefficiency and to increase the quality and to make a stronger cases, the case of the unit that will again -- where the desiccant wheel go inside. It's mission critical. Again, it's a very important production. We cannot compromise on that. And the R&D and the project management developed a lot of solution and innovative ideas inside the unit. You've seen these graphics what comes inside of our typical dehumidifier, stronger enclosure to maintain and avoid leakage and maintaining what we call 10-month break, dumpers. And again, you saw on the movie, the small footprint. We are 1 of the smallest equipment supplier in terms of footprint producer. And we are proud because it comes from the modularity. I spoke about the desiccant wheel, how is important inside with all the energy solution and -- energy savings solution, but it's not only that there is a continuous research for all the other components, the heat exchangers, fans, filters. All in all, it's tremendously important for this application to provide the best quality, of course, at the best and reasonable price, but to make sure we give the right performance inside the room, what we call the dry room. Now the journey, the journey today, we know where we are. There is tremendous race to go all electrical cars. We can see everybody. We know the battery technology where we are now, I explained to you the lithium ion requires immediate control. So that's why Munters is there. What's going to happen in the short future. The market is booming. It's everywhere. There will be a focus on recycling, it will be power technology, power, agricultural, drones and even potentially planes -- airplanes, the limited, nowadays, is in the weight of the battery. But in few -- 10 years, maybe that couldn't be a limit. We monitor carefully where the battery technology goes. We are working in close connection with university and labs. We are very ahead of the curve on this respect. We know there is next generation of battery will be solid-state battery. What's the difference? The difference is the electrolyte instead of being liquid is solid as the name. But the good news is it's still based on lithium ion. So again, it will require a tight control of the environment of the humidity. There are more chemistry in the study. There is again a race to find the perfect mix. We are at the early stage of the sodium ion. What's the difference with sodium ion? At the moment, it's not at all, by energy density, good to compare it to lithium ion, but it introduced the safety because it doesn't catch fire. However, it is very reactive with water. As we know, sodium is very reactive with water. Therefore, still, if this technology will be introduced in the market, Munters will be still required. So all in all, we believe we'll be very much active for the next short period, and Munters will be leading and continuously leading this application. Thank you, Line. Back to you.

Thank you very much, Federico. And now joining us from Amesbury in the U.S., we have our Global Product Manager of Battery, Cheryl. Good morning, Cheryl.

Hi, Lina, thank you. I'm glad to be here today. I'm going to talk a little bit about our markets and our customers. Okay. So lithium-ion battery production has been growing rapidly in 3 key regions. For over a decade, we've seen battery production grow in China to where they have about 70% of the world's manufacturing and most of the raw material in mineral processing as well. But over the past few years, with increased focus on climate change and growing consumer demand for electric vehicles, concerns about supply chain and overreliance on China, we've seen battery production increasing quickly as well in Europe and the United States. The auto companies are looking to locate their battery production locally near their vehicle plants so that they have safe and reliable and expensive transportation to their vehicle plants. So in Europe, we're -- they're working towards being climate neutral by 2050. They're putting goals in place like cutting emissions by 55% and banning fossil fuel cars by 2035. So with these moves, we're going to continue to see battery production increasing in Europe. And then similarly, in the U.S., with the Inflation Reduction Act and the infrastructure law, we've seen the battery producers are accelerating their plans to locate their factories in the United States to take advantage of these incentives and tax breaks. With the IRA, the battery needs to be assembled in the United States and most of the minerals need to be located from -- sourced from the United States or trade partners as well. This is looking to be really tough to do. But already in the past 12 months, manufacturers have announced investments of up to $60 billion in the United States. And then in China, where subsidies are starting to decrease, EV adoption keeps climbing. It doesn't matter. They had a record year last year with 7 million new energy vehicles sold. And that brings China up to about a 26% market share of all new cars sold. So Munters is well positioned for growth in these 3 key areas. Like you've heard before, we have manufacturing established for our systems in all areas with expansion and upgrade projects going on in all 3 as well. So how big and how fast will the battery market grow to be? It seems like the growth is outweighing the prediction. So this graph on the left shows battery production capacity worldwide forecasted through the year 2030. And the lower line there, the 2020 forecast, back in 2020, analysts were predicting that the whole industry would grow to be about 3,000 gigawatt hours by 2030. But the forecast keeps going up every year. So now 3 years later in 2023, the forecast is up to 8,000 gigawatt per hour. There's been over $300 billion of investments in the lithium-ion battery industry announced just in the past 4 years. So that translates to about 30 new factories being built or to be built by 2030 in Europe, over 20 factories in the United States and over 100 new factories in Asia. The biggest countries in each of the regions for our battery production look to be China with about 70% of the worldwide market share. United States will be -- will have 12% and then Germany would come in third with about 5% of the production. The Munters works with a variety of different types of customers. We work with top-tier electric vehicle battery producers. We work with large giga factories that are working on a variety of different battery technologies. And then we work with small labs and universities as well. With over 30 years experience, we've started with this industry. We worked with the first lithium metal labs way back and now all the way through to these large giga factories today. And we like continuing our work with the small labs because we learn from them. We learn about up-and-coming technologies like Federico just mentioned. And then that gives us some insight into what the dry air requirements are going to be in the future. And so Munters works with most of the key players here. Due to our contracts, we can't name many names, but I can mention a few. We've worked with University of Birmingham in the U.K., University of Münster in Germany and the University of Michigan in the U.S. And we've learned a lot from these customers that have fed into our innovative new designs, our purge designs and our energy efficiency. And although you don't see the automakers names here, they are fully involved. They're partnering with the battery makers, and we're working with them as well. So our project involvement will vary depending on the type and size of the project and the scale of the project. So for small R&D labs, they're working with new chemistries. They're working with new processes. So they may have very specialized requirements, even including super ultra-low dewpoints. These projects for us, it would mean maybe 1 or 2 dehumidification systems involved, but they may be very customized systems. We provide -- customers here may not be as experienced or have the resources to manage a full dry room project and integrate climate control, so we get more involved on these type of projects helping with the dry room design, the integration, installation support, in addition to our normal commissioning. And then once the technology is proven out in the lab that would move up to like a pilot line, and we call this a medium-sized project. And there are a lot of solid state pilot lines going in right now, trying to prove out that technology before it's ready for mass production. So here, for us, that may require 4 to 6 dehumidification systems. And these customers are going to run in like batch production rooms. So starts and stops. It's not going to be probably 24/7, but they will run continuously a lot longer than a lab. So we work with the customer to set up the operation of our system to work as they need it with their schedule. And then for the large high-volume production, the customers and the designers work together, they know exactly what they want in the dry room, but they may not know the best way to get there. So our application experts work with them to try to look at all their requirements and optimize the best solution. With mission-critical operations like this that run 24/7, it is critical that we ensure precise moisture control in the dry room and high uptime and reliable -- reliability 24/7, summer and winter. No matter how humid it is outside and how much outside air is coming into the dry room, we need to control that to very precise requirements and precise dewpoints because, as you heard, it affects product quality, yield, safety and energy efficiency. So we have value-engineered standard designs geared towards the giga factories and the contractors really like this concept because it gets them their equipment drawings. It gets them specs. It gets them utility requirements very early on in the process, so they can continue on with their factory design while we're in production, and it just helps speed up the whole project. Okay. So you've heard earlier about our orders from the automotive companies, but we're really excited to tell you about this order we received from Morrow Batteries. They're building their first pilot line in Norway, and they've chosen Munters to provide the dehumidification systems for their lab. And Federico and the Center of Excellence team helped provide the application support, the equipment design and the project management for this project. And like others, Morrow is looking to the future to build a large cell Gigafactory in Norway as well. So with that, I'm going to stop, and I'm going to turn over to a short movie that Morrow produced actually that shows the move-in of our DSS system to the Morrow lab. [Presentation]

Thank you, Cheryl. And before we open up our Q&A session, I will hand over to you, Henrik, for some closing words.

Thank you very much. I think everyone on this webinar have now understood that we are primarily focusing on the dry room, but also as Federico explained earlier, there is a lot of dynamic in the market. So we are increasingly also looking outside the dry room, both in terms of new technologies, new raw material going into battery manufacturing, both in the changes in battery manufacturing, like CO2 capture, for example, which is a new application area where we're in active discussion with some customers on how to introduce this on a more large scale. And of course, if you look at the larger battery supply chain, we also believe eventually that battery recycling will also be a theme that is emerging more and more. Short term, however, we are mostly focused on our growing installed base and how we can support our equipment in the field. And here, of course, we are leveraging our well-established service model that contains more than 400 service technicians locally deployed across our regions. But we're also adapting the service offering specifically to the battery segment. And we're also, in parallel, investing in more technology to meet the future need or future demand for our customer base, for example, like connectivity. And I think we have also talked about the prospects outside electric vehicles because if you look at the forecast and the changes in the increased forecast in battery demand, it's also evident that when we stand now in 2023, there are more applications outside the conventional electric vehicle industry. Energy efficiency is 1 thing, or energy storage, I would say, where more and more of the transition to green energy also are in need of energy storage. And with that also, we believe that will drive more battery demand. Battery recycling, I've already talked about. And then we also see a number of technology trends where the solid-state batteries is the most prominent, and we're expecting that to play into -- or come into play in the next coming years. So with this, I hope that we have convinced you all, our audience, on this webinar that we, at Munters, are well positioned for growth, that the market is dynamic, and this is why we continue to invest in our organization and that we believe we have ample opportunities aside or beyond the dry room. And now over to you, Lina.

Thank you. We are now ready for questions. And I will remind you again that you can post questions in the chat, and we will address them. Our first question comes to you, Klas. How large do you believe the battery segment can be in Munters? And do you see any risks in battery manufacturers cutting down on production due to the current market situation?

Very good question, Lina. And I think those of you that have followed us over the last couple of years may remember that order intake wise, a couple of years ago, it was 10% of AirTech, and then it moved to 20% of AirTech. And last year, we ended up at 37% at order intake that represented the batteries. In short, I think that you can say like this, we will continue to grab the market share that we have, i.e., around 50%. So we will continue to grow with the market and expand into that. And after that, then we have the service business as well.

Thank you, Klas. I will take another question to you, Klas. Can you please describe the dynamics between battery manufacturing capacity growth outlook and the capacity investments outlook. When are the investments peaking do you think? Have capacity investments already peaked in China, for example?

Also a very, very good question. And I think a fair answer on this would be that, yes, we have learned that investment each and every year seem to move their peak 1 or 2 years ahead. And I believe firmly that, that will continue. You have heard me say many times that the capacity will start to slow down first in Asia and then gradually move in to other markets. But still, there are plenty of more investments coming through for the coming years.

Thank you. Henrik, the lithium battery projection has increased to 3x in 3 years from 3,000 gigawatts in 2020 to 9,000 gigawatts in 2023. Do you see this trend continuing? Meaning in 2024, the projection may get up to 12,000 gigawatt?

Yes, I'm a big, you can say, fan about -- of trends. So of course, there is a pattern here and maybe a little bit related back to what Klas was saying, at 1 point, there will be some peak. But what is exciting is that now when this electrification trend has caught on, we see more and more applications also that is migrating outside the electric vehicle segment. So we are constantly positively surprised by this movement of the trend, and this is why I believe and I -- no 1 knows the future, of course, but I'm optimistic about the future when it comes to also the future growth trends.

Good. I think I will direct this question to Federico. If lithium is replaced by another material in a battery or for example, solid-state batteries become more common, will dehumidification still be needed, more or less advanced?

Yes. It's a very good question. As I said during my presentation, we are collaborating with the labs and the sales department to analysts to follow and to understand the next generation. The solid-state battery is still based on lithium ion, therefore, it's still very sensitive to humidity, to moisture. So still, our technology will be required. The reason we're seeing a trend of more specific condition for certain types of chemicals and minerals. Yes. And potentially, we require more advanced technology. This is why we are developing every year, every season, more solution, better features and new option for our customer. So to answer, yes, it will require more advanced technology, more research. We are doing that. We believe -- we are proud to say we are ahead of the game in many aspects. And even looking for the next chemistry, as I mentioned in my presentation, sodium ion, which still will require immediate control.

Thank you. Cheryl -- sorry. I lost my question here. Can you give me a second. Can you give an update on our competitors? And can you say anything about your market share?

Sure. So we do have smaller local competitors in each of the regions. But no 1 with the global presence and legacy like Munters. Munters is the largest system -- desiccant system supplier, we're located, we have sales in 30 countries and 17 manufacturing sites. So we are the leader in the industry. And our advantage that's kind of unique and the other competitors don't have this is that we have the rotor technology within Munters as well. We have -- we invented the desiccant technology. And for 60 years, we have been investing in research and development in the areas of material science and mass transfer and absorption. So we have those experts within Munters. And they work with our experts on the equipment side, the mechanical engineers and the electrical engineers to really put the full package together. And in that way, we have the capability to really understand how our whole system works together with the desiccant and the performance capabilities and then how to regenerate the rotor properly and really get the energy efficiency top-notch. So that's our advantage that we bring to the table. And Munters is covered globally, and we are involved in the majority of battery projects. In terms of market share, Klas mentioned earlier that we are in about 50% of battery production worldwide.

Thank you, Cheryl. Henrik, of the total cost of building a gigawatt factory, how large part is Munters of this cost?

Yes. If you look at the total CapEx going into Gigafactory, roughly 15% to 25% is the dry room. And in the dry room, around 10% to 20% is our dehumidification equipment. So that roughly translates to 3% to 5% of the total CapEx in the Gigafactory.

Klas, can you talk a bit about the margin development within battery? Does it differ from other Munters' segments?

Margin is always important. And I'm super pleased to see the stability and the solid margin development within AirTech. And the battery is the largest sector, order intake wise. Within AirTech, we always aim to take the projects, even the system projects to reach our then medium-term profitability target. So at current, slightly below the medium target moving forward, reaching the medium target.

Thank you. Henrik, are you able to comment on the service aftermarket opportunity in the longer term?

Yes. So as I also explained now when the battery -- our battery segment is growing. Of course, our installed base is growing. And we are, you can say, carbon copying the service delivery model into this segment, similar to what we have done to other segments. Of course, over the years, we have developed understanding on what the service need is for these systems. Then, of course, now in many cases, like in China and to some part in Europe and U.S., these units are relatively new. But over time, within a 3- to 5-year period, we also see more and more of the service needs emerging. And that we can see more in China where we have been a little bit longer, and we start to see those emerging trends also in Europe and in U.S.

Thank you. Klas, do you think the battery segment will be accretive to -- for Munters' margin in the coming years? Have you seen accelerated discussions with OEM in the U.S. following the IRA adoption. And as of today, can you tell us how your -- how your split battery production footprint between the different regions, U.S., Europe and China?

Great questions then, and let me try to work myself backwards here. And if I start with the last part of the question then, as you heard, our experts and managers saying earlier, we have a well-distributed production capacity around the globe; in U.S., in Europe and in Asia. And you can say we produce in 4 -- in all 3 regions then. When it comes to margins then, I mean, step by step, we are moving forward with our margin development. And I mean we are always aiming to generate profitable growth. To be very specific on the battery margins per se, let the future prove. But you can see on my smiling face that I'm very confident for us moving forward. And then I think I missed the question in the middle there.

Okay. Give me a second here. Have you seen accelerated discussions with OEMs in the U.S. following the IRA?

Also a very, very good question. And the battery projects that we have taken until now are not based really on that discussion. But I think that the battery producers, of course, were understanding where the government, so to speak, who are leaning towards. I'm very confident that with us having a full-fledged manufacturing capacity and capability in North America, we will also take benefit from this. And I have to also remind everyone that even if we would lose a battery system sales, we have a very, very strong delivery system when it comes to desiccant wheels and spare parts. So we may take that business anyhow.

Cheryl, what does your go-to-market process look like? Are you in contact with the end customer or the construction builder for a battery factory?

Sure. So we have many channels to market in this market, depending on the project size. For small labs, again, we would work with -- we could be working with a lab director, facility manager or the owner of the company with very close contact on their requirements and also, of course, the dry room contractor. But for the larger factories, there are going to be many players involved, so typically, there could be a partnership between a battery maker and an automotive company or maybe it's just a battery maker -- manufacturer project. And then there would be an engineering designer involved, our consultant that would come in and look at what the dewpoint requirement would be for that particular process, and they would do the moisture load calculations and look at exhaust air and heat loads. They would do a first cut at what the airflow requirement would be for the dehumidification system. And then our experts would come in and work with them to kind of iterate that and look at the most optimal solution. And of course, we're working with the contractors as well because they're involved in the procurement and the installation. And then at the end, we're kind of back in touch with the end user, again, when we show up to do our startup of our equipment, we're integrating with their systems, we're doing training and then we're talking to them about ongoing service.

Good. Henrik, could you say something about the competitive situation in service? Do you meet the same competitors in service as you do in equipment? And what are the key components that need to be serviced?

Yes, it's also a good question. So typically, and now I also say this in more general because the battery segment have -- is yet a little bit to evolve in that sense. But we see normally that we have a very good chance on servicing our equipment. We are the specialists, experts and typically, we are then approached to also do the service on the equipment. I think competition wise, it's not really our direct equipment competitors that we are facing in that sense. It's more that some of our customers have own service facility management companies in-house that also do service on our equipment or other general HVAC companies. And when it comes to the service, of course, the rotor is 1 of the main components there. But as also Federico was saying earlier, you saw the systems. It has a number of moving components like motors, fans, similar things that filters that from time to time need to be exchanged or optimized.

Yes. Good. Thank you. And another question for you. What is Munters doing to keep delivering systems in this growing segment? How are we meeting capacity demand?

Yes. It's also a good question that is also on top of our management agenda as well. We are -- or we have, I would say, an aggressive investment plan in place that we have started to execute on. We opened our production manufacturing in Hodonin in Czech Republic last year. We announced last year also that we're going to upgrade our production facility in Amesbury, and in the short term, we have also added extra capacity to that. But the other component is also important to say that we also have, despite all of this, some spare capacity. So we have not yet optimized or fully utilized our current manufacturing footprint.

Good. Thank you. And I think our last question, I will direct to you, Federico. Considering the increased focus on energy around the world, how do Munters address this with our installations?

Thank you. That's indeed a very tremendous important topic. It's a very hot topic. As I said during my presentation, Munters has been the pioneer in this study in this application for the battery. And I can say certainly in the last 10 years, the focus primarily was more on the capital investment for the end user for the people building this facility. And also the other focus, the other target was the reliability, the uptime, as we understand during my presentation, losing for a few minutes, the condition, we could lose a lot of millions of dollars in battery batch. So that was the primary focus during last, say, 10 years. Nowadays -- and that's also 1 of the reasons why Munters is so successful. Nowadays, with more mature market in terms of battery manufacturing, it is true that focus is switching on energy and it's there running such a large-scale mass production facility, it costs, of course. And in some region, globally, the energy, there is a sort of crisis of energy. So Munters is addressing and following carefully the sector. And we give a response in 2, say, dimension, in 2 ways. The first is the product technology. I hope you have understood during this presentation that we are ahead of the game. We're offering the latest advanced technology with the rotor and all components inside the unit. So certainly, we are the best. I mean, it's probably -- I don't know it's really common knowledge. We are actually selling the desiccant wheel to most of our competitors. So we know what we're doing better than anybody else. The second dimension is the knowledge. The knowledge and proudly people like my team and other teams globally that can have a long -- a lot of experience can go to side and understand carefully the energy needs of the installation. It is -- it's fair to say there is a great deal of energy going around this building. And a lot of that is wasted. So our experience can help a customer to recover this energy. And we have a solution, a lot of solution to do that. We are implementing important features. We are implementing advanced, say, solution, AI in controlling this system to make sure that it's the best performance possible and to monitor the trends and making the customer saving a lot of money. And we can do this because of the 30-plus years experience Munters had on this application.

Thank you. Klas, sorry, 1 last question for you as well. Who do you think poses the biggest competitive threat for Munters in the future? Asian players, Western players?

Great question, and I love competition. Munters do love competition. We are always on our toes when we have great competition. The way I look upon it, and that is the strategy for Munters moving forward. We may be challenged in Asia or in Europe or in U.S. But we have capacity, knowledge and installation in all 3 regions. So from a global perspective, I hate to say it because it may sound a little bit arrogant. I don't fear any competition whatsoever.

Good. Thank you very much. I do see a few more questions here, and I will reach out to you separately on this. If you do have any questions, please also e-mail in questions, but we are out of time now, and I would like to thank Klas, Henrik, Cheryl and Federico for joining today, and thank you, everyone, for listening in, and see you next time. Thank you.

Thank you.

Thank you.