SFC Energy AG (F3C) Earnings Call Transcript & Summary

Well, thank you very much, [Foreign Language]. Good morning, ladies and gentlemen, and thank you very much for taking the time to join our call on short notice where we are reporting on the reason and the background for the adjustment of our 2025 forecast yesterday. As always, Daniel and myself will share the presentation. And after going through this and giving you the background, I think it's also important to summarize the outlook, I'd say, after the revision of the guidance and metrics. We are looking forward to the question-and-answer session thereafter. Let me, first of all, state let's say that I, and we, and as a team and as a company, naturally, we are particularly unhappy to be obliged to go this route and undergo a revision of the forecast. But we took a fact-based decision. And after a clear analysis, I think we also have a clear way and path forward, which we want to share with you. Just summarizing the key reasons here. I think we are reflecting a massive overall uncertainty in the economic environment from fluctuating exchange rates to, I'd say, impacted decision-making, especially, I'd say, with customers looking at new technologies, when, I'd say, tariffs are impacting also price decisions, that's the one element. The other element is that we also have to face, I'd say, very recently and at the end, yesterday, some unexpected delays in defense programs here that we have planned for this year's execution, particularly in India. And I will go into those reasons together with Daniel in more detail. If we now look at the revised guidance, we expect group sales for 2025 financial year to be in the range of EUR 146.5 million to EUR 161 million, which is a shift a reduction from the previous range from EUR 160.5 million to EUR 180.9 million. We also are reflecting a new guidance for adjusted EBITDA in the range between EUR 13 million and EUR 19 million, down from EUR 24.7 million to EUR 28.2 million. And also the adjusted EBIT, new guidance being between EUR 5 million and EUR 11 million compared to EUR 17.5 million to EUR 20.6 million before. If we look into the details of the reasons. I think starting with the macroeconomic uncertainties, the depreciation of key functional currencies, namely Canadian dollar, U.S. dollar, but also Indian rupees, affects our top line as well as the profitability here within the first 6 months, and we took our assumptions also for the months to come. So that's a significant impact we are reflecting also in our numbers here. The second one is more a qualitative topic, we are seeing, I'd say, that uncertainty is also driven by, I'd say, tariff policies, especially out of the U.S., but then also into the U.S. have an impact on decision-making patterns with our customers. And especially when we look at new customers and also in customers in new end markets where it is a decision to invest into a new technology or not. And here we see reluctance increasing over the last couple of months and the slowdown, especially in the new customer business. And as an example, it is having short-term impact when we look into our U.S. business, especially new customer business has fallen short of expectations in the current fiscal year. But -- and I think this is also important because there's also still a positive part in this, let's say, overall negative situation, we are still growing. So we are ahead of last year. If we talk new business, we are still growing by 16%. If we look into the overall business, including the business with existing customers, we are looking at the growth rate here in the U.S. also between 20% to 30%, let's say, going forward into the year. The second element, I have mentioned this before. If we look at our current assessment, we say received information yesterday out of India, the key programs for this year in our year-end forecast previously will not be executed this year because funding has been reallocated to other purposes, we are told -- we got aware that we are talking here about a shift of funds in general towards funding of, let's say, drone and counter drone activities. This is having an impact in 2025. But it is also at the same time expected to happen in 2026, and we had this for the forecast here in the next year to an existing and strong pipeline in defense in general. But I'd say at this point of the year, looking at first of August today, we have difficulties. And so, no immediate compensation potential here for those delays. We look at the profitability, and Daniel will go into this in more details. Yes, we have an impact out of the exchange rates here on the profitability side that we have temporarily high expenses in the first half year. For those of you who have, I'd say, been with us now for the recent past year, you would remember, we are in the midst of our digitization of the organization, investing into the introduction of a new ERP system. And we did quite -- we have been doing and we are doing quite some investments in IT and cybersecurity infrastructure. So both together puts a burden on the current financial year, although we expect this to normalize over the year, especially on IT and ERP. Before I hand over to Daniel, I think, for completeness sake, and definitely of lower significance here in terms of quantitative impact, but still, looking at the entire picture, we also see a noticeable slowdown in investments in our hydrogen systems. We see -- still see activity in selected regions. We are happy with the activity in Scandinavia. We are happy with the activity also in Benelux countries, and we have, I would say, pilot and key projects in India as well as in Singapore in the pipeline. But naturally, against this overall development, we are assessing timelines and also resource allocation to this part of the business. With this, let me hand over to Daniel to lead you through, I'd say, the current status of preliminary half year figures as well as, I'd say, the profitability related part of the outlook.

Good morning, everybody. Thank you for joining the call. I think, going -- going and looking into what happened and our performance in the second quarter last year and then give a little bit of outlook on the cost basis. I think when we look at the last quarter, especially towards the end of the quarter, and there are three major impacts really that drove down our profitability. I think one of them, Peter mentioned it is, of course, the currency impact. Remember, we made substantial sales in Canada, we made substantial sales in the U.S. as well as in India, all three countries have gone down -- or gone against for -- so to speak, which, of course, also then translates into a lower gross of gross margin and because we sell in U.S. dollar, we sell in the local currency. I think this is one big impact where we were a bit more confident at the end of the first quarter that we will not see those currencies go down significantly and/or at least potentially stay stable. The second impact that we've seen, and I think this also of temporary nature, it's been mentioned already. The investments in a transition of our ERP system were slightly higher towards the end of the quarter. We try to speed up some of the transitions. Again, get it out there a little bit earlier and then expected with the implementation. So some of the cost that we expected would go into the second half of the year. And half occurred in the first half of the year, also with some other digitalization projects. So that costs were a little bit higher than we expected. And then last but not least, we again had as a third factor a loss on our currency translation, mostly of the intercompany interim [indiscernible] and receivables. So unrealized, but still it shows as an expense in the P&L. So these are the -- these are basically the four or the three major factors why profitability has come down. And now if you look at it quarter-over-quarter, please also don't forget now that the second quarter is a difference between the half year numbers in the first quarter and obviously, the deterioration of the exchange rates in the first half year and applied to the full 6 months. So if you look at that and took that one out in the second quarter, it is a bit better than if you simply deduct 6 months from the first quarter. Nevertheless, for us, it's important to look forward to implement measures to make sure that we increase profitability again, look how we can manage it to increase our margin. I think we [ implemented ] (sic) a certain cost cutting or cost optimization patterns. We want to make sure, of course, that we still grow. We want to make sure, of course, that we still invest into those key topics that we have invested, which enable us to grow. But of course, some of those things may be postponed a little bit, while other things might shift into other quarters. So overall, we want to make sure that we implement those measures, which includes reviewing hiring, which includes looking at what we spent in the digitalization processes in the digitalization projects. Knowing what could be a little bit pushed towards the future without impacting our operations significantly, these are the key measures that we'll implement going forward. I think overall, again, you see the net cash position that we're having EUR 46 million. So still a very solid net cash position from the [indiscernible] operating cash flow, and we can do the math, and we did well. We saw the working capital increasing over in the second quarter. So that is also a little bit of impact on the cash flow, but what we consider still be solid in our financial position. I think more details will provide with you, obviously, once the first half year report will have be published.

So with this, I will take over again and I'd say, summarize the outlook here. Okay? At the end, baseline here is SFC remains and will remain on a profitable growth path. And two elements to this. If we look into, let's say, the ongoing and existing customer base of our methanol fuel cell business here for industrial customers in Europe and U.S., we are still seeing a dynamic organic growth here of about at 20% and above. Since yesterday, we received another significant multimillion dollar contract here of [ LifeFuel ](sic), let's say, after closing of I'd say the date, but that's something that naturally will also translate into, let's say, the continuation here of this growth part. If we look into our clean power management segment, we are on track, and we are showing approximately 10% growth year-on-year organically after 6 months. We have to address and have to accept the setback here on -- and the delay in the defense part of the business. But there is a significant and strong project pipeline here in Europe as well as in India. We expect contract awards in the near term. So we are talking here about, I'd say, weeks or within the quarter. In parallel, additional vehicle programs next to the one we published in May with Polaris are in execution. And also there, I think, we are happy and we will be happy to announce as soon as they are ready. And we see significant potential here with our capabilities, our fuel cells being, let's say, a highly agile, lightweight energy source that doesn't create a lot of noise and no temperature. So a low signature energy source which fits also to, let's say, the charging of batteries for drones, and we have started the first project here in Germany, as well as in India. Another new segment, I think we have successfully entered. We are looking at significant infrastructure investments in Germany in traffic and construction site safety. We did our first large scale project in Germany on a highway Autobahn bridge and completed it recently. So we are looking here at about 60 EFRS being deployed at one construction site for a couple of months. And the next step here is to solidify the partnership with one of the market leaders here in the area of traffic and construction safety. Again, a reliable energy source that runs longer than battery and therefore, you bring down maintenance costs and total operating costs. So that's, I think, another forward-looking step here. If we now look into, let's say, our M&A strategy, we are naturally continuing to evaluate targets here with a focus here to the U.S. as published already, we are looking at the defense sector as well as the oil and gas sector, and we are doing a similar thing in Southeast Asia and also on particular targets here in Europe. The pattern is similar. It's all about market access to have faster access to market and then be a platform for organic growth. The last one to mention is, I think, with the launch of our own production facility in the U.S. in the fourth quarter, we are going local for local, like we have been doing before, like we did it in India. We are sending not just a strong signal to our customer to -- of customer proximity. But with the local value add, naturally we immediately have a positive impact on potential tariff impact. So we are balancing and offsetting the impact of U.S. tariffs here. And at the same time, I think, again, it's a good basis for, let's say, especially new customers to accelerate their decision-making. In total, as mentioned before, it is very obvious that we are naturally unhappy with the situation to cut back and bring down our targets for the year 2025 are seeing the facts we are obliged to do so. But you see us with a clear view ahead, you see us also convinced and optimistic, I think, with the right facts and with the right products, technology and customer base to be back on and remain on a profitable growth path. With this, we would like to conclude the presentation here and we'll be happy to answer all your questions or listen to your comments. Thank you very much. Handing back to Vasileos.

[Operator Instructions] The first question comes from the line of Usama Tariq with ABN AMRO ODDO.

I hope I'm audible. I just have three initial questions, if I may, very general questions, with regards to North America. Could you provide a bit of split as to what has gone wrong there in terms of customer appetite? Is it more oil and gas angle to it? Could you just provide a little bit more granularity there? Secondly, how is the production capacity going on there? I believe that you had previously indicated that by August or September, there would be production capacity up and running. Could you -- if I'm correct, please correct me if I'm wrong, is there some advancement there? And finally, with regards to India, what is the visibility for 2026?

Thank you very much for joining us. Well, in North America, I think looking into the details here, we are -- I'd say it's not a particular end market where we see new customers being more hesitant and just, let's say, maybe delaying the decision-making here to enter a new technology. This is in oil and gas, and -- but also, I'd say, in our surveillance CCTV business. But at the end, yes, going wrong, you are right, naturally, we are not at our original expectations that we're also lying for the new business at, let's say, 30% growth rate. But still, just as a matter of fact, we are looking at double-digit growth here, 16% organic growth. Also, I'd say, for the first 6 months. It is disappointing not being at the targeted level. I think calibrating it at this point in time and let's say, shifting our production over there and offsetting and eliminating some of, I'd say, those hesitations and delaying factors is exactly the strategy and the plan. And with this, we are at, let's say, the status in Salt Lake City. I was there, what, 2 weeks ago. The preparation is up at full speed, let's say, you're right, Q3 is, let's say, the timeline where we want to complete it and be ready for commissioning, but then production is Q4 and we are on track there. At the end, if you recall with us, yes, it's basically also doing the same we did already in India, 2.5 years back overcoming, let's say, protectionist hurdles. Localizing of the supply chain afterwards then is the second step, which we are, let's say, performing in India as we speak. And in the U.S., it's, let's say, the next step. Looking at the visibility in India, well, I think having, let's say, news as of yesterday, it's naturally very, very recent, but it is also, I think, at the same time, a very logical sequence here that we are told, and I think we have no reason to question this that those programs are still in execution, and it is a postponement to 2026. So definitely, we, let's say, expect this to be, I'd say, within the 2020 -- then -- and we will factor it in into our 2026 forecast and the budget there. I think that's maybe at this point in time, the baseline assumption without having been able to go into more details since, let's say, yesterday afternoon. But it's a logical one. Those programs don't go away. It's about fielding the next set of systems for border security and also infantry battalions. So it is, let's say, once the funding is cleared, it's then, again, a mechanical process.

The next question comes from the line of Michael Kuhn with Deutsche Bank.

I'd first start with, let's say, building block. So obviously, it's quite a big cut to your top line forecast. Could you put, let's say, like rough price tax on it? What was India what was North America and what other factors made you move the top line forecast down that significantly?

Michael, thanks for joining us. Well, it is a big cut, you're right there and significant. If you look at it, we are looking, I'd say, at EUR 4 million to EUR 7 million rather the upper end in India for the defense part, and we are looking at, let's say -- depending on the final currency development here until the year-end, we are also looking at EUR 4 million to EUR 6 million here in the U.S. And then overall, about EUR 2.5 million on hydrogen. And that's, let's say, overall, where you have, let's say, the main element others are, let's say, more, let's say, more -- there's more granularity in this like some, I'd say, projects as in the usual process of doing the year-end forecast and the budgeting. And I think without this last impact here of a firm and clear decision given to us yesterday on India, I think we would have digested the impact here of the environment whether a reasonable, let's say, lower end guidance result but this was one element too -- or one big -- too big to swallow. One bite, too big to swallow, sorry.

All right. Understood. So the EUR 4 million to EUR 6 million was for the lower U.S. business, the second element?

Yes.

Okay. And in that...

And this is really, the options -- sorry. Sorry, but just an add-on, this is really, let's say, where I said we had an expectation of higher organic growth rate with new customers. We are now at the run rate of 16%. I think given the circumstances, still a significant organic one, but simply not the 30-plus percent we had planned for. And we, I think, had a good momentum, let's say, in the later part of last year.

Understood. Then on FX you mentioned the moves in your functional currencies, although I'd say looking at last year's average rates, the moves are not, let's say, too dramatic. What was in your initial budget on FX rates versus the U.S. dollar and the Canadian dollar. And what are you budgeting with now? So is there a buffer built in now? And was there a buffer built in initially?

Michael, so first of all, in our legal budget, yes, we had not significantly, but slightly more favorable exchange rates with regards to U.S. doll [indiscernible] and Canadian dollar. We're talking about anything it depends on which currency but we're looking at 5%, 6% difference or 3%, right, in that range and depending on what currency. So that's the first thing. And then the second one, what -- yes, would it be now built in the buffer, obviously, the forecast was the end of the year is based on what we would consider conservative exchange rates. So we would not expect an appreciation of any of these three large currencies. So that is really what we based upon. Again, that has an impact, obviously, on the top line, it has a little -- a bigger impact on the gross margin, it's part of the fact that we do source in U.S. more, we source in Canadian dollar, but there's a time lack until this really that flows into the cost of materials even longer because some of the stuff that we've been using -- we've been informed that the supply chain has been purchased 6 months ago, especially in those very specific components have -- which require, for example, for the MEA production which are sourced in the U.S., which are sourced in the -- on long term. So this is one of them. Then obviously, if we then look at the exchange rate, and I mentioned it's mostly intercompany and receivables and liabilities. Some of the stuff, how we finance our subsidiaries with shareholder loans, which are also in local currency. This is really for having efficient capital structures in our subsidiaries. So all of this really [ caters ] (sic) now has an impact again, 2/3 of that is unrealized, right? But yes, it's there. I think -- I hope that answers the question.

It does, it does. Two more maybe on the ERP costs, are you, let's say, within budget there? Or have you, let's say, incurred some cost overruns versus the initial budget here over recent months?

So basically, on a full year, we are in budget. Potentially, we have slight cost overrun, but the cost overrun would not be significant. However, as I mentioned, we really speed up on individual measures trying to get the implementation done on time. So a lot of the costs that we planned will happen in the second half of the year have really occurred in the first half of the year. So that cost has been absorbed. It is a big project. It's a complex project, right? And I would not exclude that there's a cost overrun. But I would not -- at this point in time, we are not looking at a significant cost overrun for the time being.

On your adjusted EBIT guidance, at the low end, you're guiding for EUR 5 million and you have actually generated EUR 4.6 million in the first half. So at the low end, you're basically guiding for pretty much no profit in the second half. What would be, let's say, this very adverse scenario that would make you generate no adjusted EBIT in the second half?

We looked at this yesterday also, and Peter and myself have been discussing this up and down. And we're really looking at what will be the worst, worst case. And I think that I know I have to at least discuss the [indiscernible]. So what would that mean? That would mean that we would have a further deterioration in exchange rates. That would mean that we would obviously end up at the lower end of our top line. It would imply, thirdly, that we would have a low, or lower gross margin, which we can also be -- is also based on the fact that we are selling to the U.S. in U.S. dollar to Canada, in Canada dollar. Obviously, some of the portions, we -- or we are thinking maybe we hedge. Let's assume that the exchange rates develop worse, let's assume that additional customs will be added to those exports, then really, this will be the worst first case. I think these are the three variables that we're really looking at. Let's assume the worse will not come to worst, and let's assume that the status quo would maintain as it is, and then we would not expect to hit the worst case.

All right. Very clear. And then last question, promise. And I know it's a nasty one. Looking at the past 3 years and your earnings improvement, what would you say was underlying improvement? And what was in hindsight more driven by favorable FX moves?

The last part of your question, acoustically, I did not get what was -- underlying and what was?

What was favorable currency moves. Because, obviously, we had quite a strong dollar depreciation until the end of last year, and that coincided with your earnings moving up. So the kind of obvious question is what was underlying earnings strength and what was actually favorable currency moves?

Well, I think we can differentiate. They're pretty clearly and if you look at it, if we talk about the organic growth and the unit growth, including the price stability and therefore, let's say, the gross margin development. I think we are, let's say, able to show that the major part here is, let's say, an underlying growth line. But at the same time, I think, yes. And we showed this also in our, let's say, extraordinary earnings, and Daniel will go into this in a second. I think this was also very transparently to see that there were times where we had, let's say, exchange rate gains, but at the end, the fact that we had -- we have a growing customer base with very stable pricing is, I think, the underlying driver here.

I think Michael, if you look at the exchange rates right in 2023 and 2024. So there was not a favorable development of exchange rate, at least not sustainable over 3, 4, 5 quarters. More or less, those ways were over 4 quarters with the gains and the losses that we made more or less stable. That's also on the way we looked at it and managed those risks. What we've really seen is anticipate winning of 2025. And if you look at the charge of U.S. dollar [indiscernible]. I mean that's a major, a massive, deterioration of those all three exchange rates, which we've never seen the INR save the world. Not huge gains, But not huge losses on that. With the dollar here and there, the same thing. And I think this is really something that kicked us big time. And obviously -- and we discussed it before. Of course, we're discussing with our customers exchange rate costs. We have -- we've started that 2, 3, 4 months ago, we said, can you do share the pain. I mean I would not say that our profitability and the gains that we made is really based on exchange rates. I think -- the other two things, right? It's a huge amount that we have for the [indiscernible] IT expenses. We're talking about more than EUR 2 million that we spent in the first quarter. that really hits our admin expenses, which we did not have in 2024 and that amount at least in 2023. In addition, I said something, but we will report on that in -- have to report is the capitalization of R&D expenses. We have reduced that significantly because we're developing on certain other products like EMEA where we cannot obviously not look capitalized. So in spite of the fact that our R&D expenses have not increased significantly -- sorry, our R&D spend, given the much, much lower capitalization rate, you would see that the R&D expenses in the P&L are year-on-year much higher, even though they spend, the total spend has not changed. So there's a number of impacts where we would say it does not impact our underlying profitability. But of course, if I'm missing 2%, 3%, 4%, 5% on the gross margin, that goes directly into the EBITDA margin. If you look at the EBITDA loss for the first half of the year, without justifying anything. We know it's not where it should be. We know it's not exactly -- not what we want to see. It is okayish, right? Not super good, but it's really okayish.

The next question comes from the line of Karsten Von Blumenthal with First Berlin.

Am I audible?

Yes.

Absolutely, Karsten.

Perfect. So my first question is, do you believe that 2025 is, in a way, an exceptional year? And your business will normalize or say you will adapt to the new global situation of tariffs? Or do you think that will weigh on your business for a longer time?

Well, if I may start here, yes, I think we are, as we speak, adapting. Now, if we look into, let's say, what we have already done here in India. What we are now doing in the U.S. go local for local, naturally, we are taking out this level of risk here. And in addition, I think the second element to also look and continue to look into, I'd say, potential M&A also for accelerating market access that then helps us to again grow organically with our fuel cell business in those regions like the U.S. as well as Southeast Asia, I think those are two logical measures here. And at same time, and I think that's also maybe still reflecting also on one of the questions here from -- Michael asked before and also fits to your I think after also this growth phase here, going back and looking at the overall also cost structure, what Daniel mentioned before, going into, let's say, a review of all plant hirings and reassess it and at the same time, looking at, let's say, from D&A to, let's say, their IT and cybersecurity expenses and calibrate this again to a plane where I think we think it's reasonable. I think it's a healthy and good exercise, and we will go through this. And that's why I think we are confident after, I'd say, recalibrating our targets here for this year, and let's say, nobody intends yet to end at the lower end, but still we have to make an assessment of what an absolute worst case is after, I'd say, when you start such a revision, still confident to look at a growing and profitable company also at the end of this year and going into '26 and forward.

All right. One follow-up question from my side. As far as I remember in the Q1 conference call, I asked you about the U.S. tariffs and currency fluctuation, and you were, at that point in time, very optimistic that would not hit you hard. So what has happened in between that you obviously changed your mind?

Well, I would not say we have changed our mind. I think we have seen some learnings, as mentioned before, especially with new customers. And there, I would really like to draw your attention to the fact that the existing business with existing customers is growing by, let's say, above 20%, some of them 30%. But new business, we underestimated, and I think that's definitely our mistake here. And we are happy to, let's say, also state this openly. The assessment on the new business. And on the adoption speed for the new technology, we underestimated the impact here of uncertainties on the decision-making process with customers, and I think we only can react to this, but again, being closer with our customers being within the respective country to simply overcome this kind of risk here. And I think this is definitely the learning curve that at the end also really surfaced now more in the second quarter than in the first quarter.

Right. That's very helpful. Just one follow-up. Do you have the feeling that it is the general insecurity regarding the Trump administration's economic policy that keeps new customers from engaging with you? Are -- I mean, that's quite a difference between your existing business and now, say, exaggerate new business. What are the reasons?

Well, as you said, it's more a feeling. I think we have naturally still a diverse customer base here with, let's say, I would say, also maybe different political judgments here. But at the end, it's more effect-based decision-making when you have, let's say, an impact on, let's say, pricing, when you have an impact on interest rates, take an investment decision for a new technology, well is an easier one to postpone because you don't have to move that month. You don't have to move that quarter. You already have an existing business. And that's why it is let's say, not a month to make a decision at a point where you feel the uncertainty is higher than normal. I think that is -- even not related now to, let's say, a Trump administration. It's just a factual assessment that, well, if I have more uncertainty and insecurity, I postpone what is not absolutely necessary.

Yes. Understood. Last question from my side. Do you believe that with your existing customers in Q3 and Q4, you will keep the strong growth you have shown in the first half?

Yes, absolutely. And as mentioned, we just coincidentally, we got a significant or day and also yesterday night overnight here, which was not unexpected. We were there 2 weeks ago with key customers. So fine on this end.

The next question is a follow-up question, and comes from the line of Usama Tariq with ABN AMRO ODDO.

Just two follow-up questions, if I may. First one is with regards to tariffs. I'm just trying to get a better understanding. Could you quantify the impact of the last stated position of U.S. administration on tariffs? Could you just indicate where it will impact, of course, gross margin, but how much would it be impacted you could provide any numbers going forward right for this end of this year and the year after that? And secondly, a little bit unrelated. What was your guidance on CapEx for the year? And do you still, if I may ask, foresee a positive free cash flow for this year? Those would be two questions.

Well, then let me start with the tariff part, yes, we did this calculation, and we also did, let's say, pulled in shipments to, I'd say, to Q1 as much as possible. There were very little shipments here in Q2. And now, I'd say, looking at the remaining time of the year, we did this calculation, we will see, let's say, an approximate impact here of locally produced products and price of 5% to 10%, which we will have to, I'd say -- or we are confident to split with our customers. So at the end of the day, overall pricing structure will be, let's say, impacted within this range at the end customer level. If we look into the gross margin, so on an initial level of 2 to 3 percentage points here on the gross margin with, let's say, localization, we are pretty confident to overcome this. But we factored this in now in our year-end projections that are contained in the new guidance. So that was also an element we factored in.

With regards to CapEx, we didn't give a guidance out with regards to CapEx. But we were looking at CapEx slightly north of EUR 10 million. We are, with regards to CapEx, pure CapEx pretty much in line with what we have projected. Most likely, we've been a little bit better from what we have projected here. And with regards to the cash flow to the end of the year, I think just where we aim at having a positive cash flow towards the end of the year. However, the key win -- the key variable is and remains working capital. So it's not CapEx that is eating into my cash generation is really how working capital the develops, how in a [indiscernible] of our working capital, specifically, accounts receivables. So then I think towards the end of the year besides, yes.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mr. Podesser for any closing remarks. Thank you.

Well, thank you very much for coming in and sharing the time with us here also with some, I'd say, challenging and difficult messages from our side. As I said, you see us in, I think, a mode of clear analysis. And I'd say, with also a clear look ahead. As always, let's say, Daniel, Susan, myself, we are at your disposal also for the bilateral discussions as a follow-up. Thank you very much for your time, and have a good day. Thank you.

Thank you.