Spectris Limited (SXS) Earnings Call Transcript & Summary

Good morning. Thank you for attending today's Spectris First Quarter Trading Update Call. My name is Sarah, and I'll be your moderator today. [Operator Instructions] I would now like to pass the conference over to our host, Andrew Heath, Chief Executive. Please go ahead.

Thank you, and good morning, everyone, and welcome to our first quarter conference call. I'm Andrew Heath, Chief Executive of Spectris, and I'm joined by Angela Noon, our Chief Financial Officer. During the first quarter, we made good strategic progress on integrating our acquisitions, which are performing very well, and we also made continued significant progress on our Profit Improvement Program. We highlighted at our full year results in February that end market softness was likely to continue into 2025, and that has been the case with further uncertainty impacting specific end markets. In this environment, we continue to make strong progress in delivering on our strategy and are working closely with our customers. We're having lots of constructive conversations with them. However, it is clearly taking longer than usual for our customers to make decisions and place orders. As a result, in the first quarter, sales were down 2% on a constant currency basis. And when looking at the new primitive for the group, that's including acquisitions, but excluding disposals that we made in 2024, sales actually increased 5% on a constant currency basis. I'm very pleased with the performance of the acquisitions. They are all performing well, in line with expectations and continuing to grow. The great thing is that they're providing even more opportunity for us to work with our customers. For instance, the addition of Micromeritics and SciAps alongside Malvern Panalytical has already delivered incremental new orders. On a like-for-like basis, excluding the impact of acquisitions, sales were down 8% in the period, driven by a number of distinct factors. In Spectris Scientific, like-for-like sales were down 11%. Cleantech, specifically battery materials activity remains at very low levels. Academia has been impacted by market uncertainty and semiconductor and pharma were notably weak. We saw delays in customer ordering, as I've said, with our in-period book and turn business being notably lower, very much towards the end of the period. By region, European sales held up, while Asia and particularly North America were lower. On orders, though, we did see positive growth in semis and also primary materials. In Spectris Dynamics, like-for-like sales were down 3%. Automotive was down significantly, and that's particularly driven by Europe as was consumer electronics. But on the positive side, we saw good growth in machine manufacturing and continuing strength in aerospace and defense. On the order side, orders were up in North America and Asia Pacific, albeit held back by the automotive decline I mentioned in Europe. Encouragingly, for the group, our order book increased at the end of the first quarter to GBP 529 million, which is 4% up on a constant currency basis with a book-to-bill of 1.07x. It's also reassuring to see that April has gotten off to a good start and is trending well ahead of last year, albeit against a soft comparator, which improves our like-for-like position. This is particularly the case in Scientific, where we've seen a much stronger relative performance in April. Since Liberation Day, we have not seen any notable decline in orders and sales despite some deliveries being delayed such that April is supportive of our outlook. Moving on to what we are seeing in the market and how we are reacting to the uncertainty. Looking at the world today, right now, it's unclear how things will play out, and it will take a while longer for clarity to emerge. What we do know, however, is that we expect to be able to offset the direct impact of tariffs, our businesses benefit from strong differentiated market positions and they have good pricing power, and we have the ability to implement surcharges. I think it's important to remember our businesses are vital partners to our customers and where our products are essential, whether that be in driving innovation or in testing and measuring critical parameters. Our businesses also have a global operational footprint with a significant presence in the U.S. And ultimately, if we have to, we have the ability to reconfigure our supply chains and operations relatively quickly. We also acknowledge that it is too early to assess the second order effects of the tariffs, potential indirect impact of tariffs that is on end market demand. But again, we are focusing on what we can control. We already took action last year, putting in place our Profit Improvement Program. The program is ahead of target with at least GBP 30 million of savings to be delivered in 2025, very much weighted to the second half and a run rate of at least GBP 50 million in 2026. As a reminder, our Profit Improvement Program comprises 3 core elements: firstly, general cost restructuring; secondly, cost synergies from our acquisitions; and thirdly, ERP. On the general restructuring, we mainly completed that work at the end of -- by the end of last year, and we are already getting the benefits from the savings. On the acquisitions, the integration is well advanced, and we expect to have completed the majority of the integration activity by the middle of this year. We have certainly been encouraged by the strong start our acquisitions have made in 2025. And in both Spectris Scientific and Spectris Dynamics, our expanded propositions are resonating really well with customers. And as I mentioned earlier, we are already benefiting from new incremental orders from the stronger combined offering, giving us upside confidence on our revenue synergy projection. The cost synergies are also progressing ahead of plan. And again, we see upside to the targets that we have previously announced. And on ERP, we are now moving into the optimization phase of the implementations in both Malvern Panalytical and HBK. Together, our Profit Improvement Program and the contribution from the acquisitions we made last year will provide at least GBP 60 million of incremental profit contribution in 2025. Additionally, given the uncertain market backdrop, we are retaining a tight control on costs and are taking further action. Turning now to the balance sheet. At the end of the period, net debt was GBP 502 million as of the end of March. The improvement compared to the end of December was mostly driven by working capital seasonality. Bringing leverage back down to within our 1x to 2x target range remains a key priority for the group, as we've said previously. And as previously discussed, we have a number of levers, most notably improvements in working capital to support deleveraging through this year. Spectris is a high-quality business with leading positions in attractive structural growth markets. The downturn that we're seeing has been unusual in its length as we discussed at our full year results. I mean demand has been soft for 2 years now. But with the strategic actions we have taken, we are very well placed to benefit strongly when markets recover. As we said, we always outperform when they do. Coming now to the outlook for 2025. As we've already said, we expect to be able to mitigate the direct impact of tariffs. This, combined with the continued strong strategic execution that I've outlined this morning means we currently continue to expect strong growth in adjusted operating margin in 2025, in line with market expectations. We are mindful, though, of the uncertain macroeconomic backdrop and any potential indirect tariff impacts on end market demand. However, as I said, it's simply too early to determine how this will play out and how it will affect customer buying behavior. We're also mindful of the recent strengthening of sterling. So in summary, while end market softness in the first quarter materialized as expected, we continue to make excellent strategic progress. There is clearly a headwind, but we have a number of levers that we are pulling and April's trading performance is reassuring. Our Profit Improvement Program is tracking ahead of plan, our acquisitions are being successfully integrated and are performing well and our enhanced offerings across our 2 core divisions, as I said, are already resonating strongly with customers. The actions we have taken and continue to take have increased the quality and resilience of the group with 2 world-class divisions capable of delivering robust growth through the cycle at attractive margins with strong cash conversion. And with that, Angela and I are very happy to take your questions.

[Operator Instructions] Our first question comes from the line of Lush Mahendrarajah from JPMorgan.

I've got a couple if that's okay. The first is just on Spectris Scientific. You called out some of the end markets within it, but if we can get a bit more color on sort of the grill and I guess, the softness in some of those markets, I guess, in particular, Pharma and Academia, that would be great. That's the first question. The second was just on April trading, obviously sort of interesting commentary there around how that's better. I mean I don't know if you can quantify that? And also, do you think there's any sort of prebuying in there potentially ahead of tariffs? And then thirdly, just an update on China would be quite helpful as well. I think there was a bit of stimulus coming through in the back end of last year. I don't know if you've seen any of that in the first quarter.

Lush, thanks very much for your question. So I mean, just in terms of the sort of color on Scientific, as I said a moment ago, I mean, really in the first quarter, we continue to see weakness in cleantech, particularly on battery materials. There's still plenty of activity on the R&D space around battery materials that we supply our products into that's holding up well. But it's been very much the decline that we saw really starting beginning of last year around really more the manufacturing side of batteries. There's a lot of battery capacity built through '21 through to '23. And then with the sort of slowing levels of EV vehicles that we're all well aware of, that there was sufficient battery capacity. So sales into the manufacturing sort of the quality assurance side of the market still remains at very low levels. I mean on -- I also talked about semiconductor, semi sales were down in Q1. To some extent, that's against a bit of a tough comp because we were coming off quite strong order intake in semis in '23. We were still burning through some of that at the beginning of last year. As I said, actually on the order side, semis was up for us in Q1. So we saw positive growth in semis as we've been in prime materials. And on the pharma side, generally, it's still weak. We did see quite a big upswing in the fourth quarter. We talked about the full year results. That momentum hasn't carried on. And just looking at how others have reported over the last period, typically, I think we're seeing consumable spend picking up in pharma with instrument sales generally still being quite suppressed. So that's sort of consistent with what the rest of the market is seeing. And then in terms of April trading, I mean, I think in particular, we clearly had a quite soft comp versus last year. You'll remember, we launched the first ERP implementation, Scientific and Malvern Panalytical in April last year. And we talked at the half year last year about circa sort of GBP 20 million of sales got deferred over that half year boundary. Clearly, Malvern Panalytical is now using the new system. It's all up and running. We don't have any of that operational disruption. We're driving efficiencies. So against the soft comp, actually, Scientific on orders and sales on a sort of on a reported basis will be up double digits for April from what we're seeing in the flash numbers for April. So they had a very strong month admittedly against a soft comp, but even if you normalize for that soft comp, it's still up. So that's quite reassuring. And then on your prebuy point, I don't -- I'm not aware that we really saw any significant prebuying. If anything, what we've seen since Liberation Day is in certain end markets, particularly sort of shipping into sort of -- from the U.S. into China, we have had customers request us delay shipping some product just because of the tariff impact. So if anything, I don't think we had a prebuy effect, but we have seen in April a bit of a -- as I said in my script, there are some orders we've not been able to deliver in April because customers have asked us to hold back because of just the way the tariffs are currently sitting. But interestingly, we have had news this week coming out of China that I think the Chinese government is considering putting exemptions on to some of the counter tariffs coming -- the products coming out of the U.S. with certain exemptions for certain end markets. And I think that should be favorable to us from what we understand.

And then just on China stimulus for Q4?

Yes. So I mean, for China, overall, China is holding up quite well. I mean we're not sort of, I'd say, seeing any sort of -- I think you've mentioned stimulus. I'm not saying we're sort of seeing any sort of direct impact of stimulus impacting China. But if we look at sort of China through Q1, actually, China was quite robust. We were up on orders in Scientific in Q1 across Asia. China was pretty much broadly sort of flat year-over-year and Dynamics was slightly down, mainly driven by sort of slightly weaker auto.

The next question is from Jonathan Hurn with Barclays.

Just a few questions for me, please. The first one, just coming back to orders. Can you just give us a feel for that order intake by division in Q1? And also just following up on from your earlier comment, obviously, orders started to improve for Scientific in April. How has been the trend for Dynamics, please? So that was the first one. Do you want to -- should we go one by one or I can do them all at once?

[ Get me ] question, Jonathan.

Yes. Okay. So like, sorry, first one is over. The second one was just in terms of obviously that weakness you saw in the book and ship business within Scientific at the back end of the quarter. Can you just give us a feel for how important or the size of that book and ship business is within Scientific? And then the third one was just coming back to tariffs. Obviously, you're saying that you can pass on obviously, tariffs through surcharges. Does that also apply to the backlog to the order book? Can you pass on those sort of potential tariff surcharges to the backlog essentially? They are the 3 questions, please.

Okay. So I think sort of first and foremost, if I look at the order performance in Q1, I think is your first question, I mean it was -- I think Scientific was sort of broadly in line with sales and Dynamics, again, sort of similar to the sort of sales number that we reported. So -- but we still had a book-to-bill of [ 1.07x ], so slightly better in both cases. So I think it's sort of -- both divisions are broadly sort of tracking the same orders as they were to sales and broadly in line with the sort of book-to-bill for the group level. Your point on the book and ship in the month for Scientific or in the period, I mean, sort of typically speaking, we would expect to see the order of magnitude of about sort of GBP 20 million -- sort of GBP 15 million to GBP 20 million of sort of book and turn every month within our Scientific division. There are some of our products we make to stock now, and we're shipping from stock. So we have limited visibility on those clearly in terms of the order backlog. But say it's that sort of GBP 15 million to GBP 20 million per month range. And if you look at -- I mean, I think to some extent, the sort of Scientific sales number looks a bit dramatic, but that 11% is effectively equivalent to GBP 20 million of sales in Q1. So it's a relatively small amount of sales has quite a big impact. So I think as we've talked previously, Q1 is always our lowest quarter. And as such, it's not really a particularly good barometer of the year. So I think I wouldn't read too much into it. We certainly -- towards the end of Q1, we saw that sort of in-period book and turn business did slow up as customers were just pausing to waiting to see what was going to happen on the tariff front. But as I say, when we look to April, actually, we've not had a sort of -- we can't see any material impact really from the tariffs post the 2nd of April other than some customers asking us to delay shipments. So I think we take that as reassuring for the time being. And then I guess, I mean on the tariff point, maybe I should deal with that because I'm sure we'll get questions on tariffs. As I said in my opening, we have good pricing power. We have the ability in our Ts and Cs with our customers to actually be able to pass through these sorts of impacts and effects through a surcharge. We did the same during sort of post-COVID period where there was exceptional freight costs. In that period, we were able to pass along those exceptional freight costs through the surcharges. So we fully anticipate being able to do the same again. As I said, when you look at our sort of geographic footprint, you also have to -- we're well placed around the world, which gives us some flexibility. But you also have to look -- it's quite a nuanced picture really. And you have to look at sort of where the competition are also based and where they're shipping from relative to us. And broadly, we don't see sort of any competitive disadvantage in terms of geographic location of competitors relative to us. And in some cases, we actually see we have an opportunity where we're based in the U.S., for instance, and our competitors aren't. So it is quite highly nuanced, but the important message we're giving today is that we expect to be able to offset the direct impact of tariffs as a consequence of both contractual means and footprint and sort of just relative position from a competitor perspective. And as I said again in my opening, we're a very asset-light business. We've reconfigured our supply chains quite a bit over the last 5, 6 years since Tariff 1.0. We saw the impact of the first range of tariffs back in 2019. We then had the whole COVID period and challenges getting shipments out of China in particular. So we took the opportunity to reconfigure our supply chains. And we now have less than 4% of our purchases come out of China for the products we ship sort of outside of China. So we have a very -- we have a very limited, very small exposure on tariff -- tariffs on components that we're assembling into our products. So that's very helpful. And then ultimately, as I said, we're very asset-light. So it is relatively easy for us to reconfigure our assembly operations if we need to. We have a good footprint around the world and space that we can move into. The challenge there is just more one of our instruments are quite complex. It's a matter of getting the right people trained up and then certifying those locations. But ultimately, if we had to move things, we could move into sort of building local geography we had to.

The next question is from Mark Davies Jones with Stifel.

Two for me, please. Firstly, you said automotive was very weak. I guess, no surprise in terms of that market backdrop. But across the board, has that also impacted the virtual testing side because I have heard some suggestions that some of those European OEMs are trying to go more virtual to catch up with the speed to market of the Chinese? That's the first one. And the second one is Trump related, but not tariff related. Have you had a look at how much of your U.S. business ultimately depends on federal funding? Because obviously, we're seeing something like attack on the universities, threats of big cuts to the National Institutes of Health, et cetera. How material is that in terms of an ultimate end customer for the group?

Okay. So let me talk to you on the automotive piece. I mean, how should I say? I mean, on auto, actually, I mean, our sales in Q1 were actually up in North America in automotive. Admittedly, that's against quite a weak comp. We saw automotive sales pull back heavily in Q1 last year with the decline of the sort of EV programs. But sales, at least encouragingly in Q1 this year were up in North America. The big impact really was in Europe, which we talked about, which is just, I think, going through quite a structural change now. I think it's a clear realization that the industry in Europe is going to have to change dramatically to compete not just with tariffs, but also with the rise of the quality of Chinese produced vehicles. So I think in the short term, we're going to continue to see some of that disruption come through. Your point on the sort of -- on the virtual test side, it's a good one. I mean last year, virtual test, we grew revenue high teens last year. So despite the challenges that the automotive industry is going through, there is clearly an accelerated adoption of the virtual test simulation sort of hardware in the loop process and the loop side of virtual test, which we are definitely benefiting from. So in Q1, our virtual test orders were slightly down, but that's mainly because we had a quite a tough comp against last year. We saw quite a few large simulator orders. So I don't think we can take Q1 as a barometer for that. And I think we would expect to see what we saw last year, which is, as you said, I think a lot of the automotive OEMs recognize that they've got big structural changes coming, they've got to radically reduce costs, and they need to get their products to market sooner and be more competitive and really embracing the virtual tools is the way forward. So we're still -- I'm still very bullish on virtual test, and that's clearly an area of focus and investment for us. And then secondly, just on your second point about exposure to U.S. federal funding, I can't give you anything like a precise answer. I think if you look at sort of defense sales in total for us, it's about 4%, 5% of our group revenue. That's obviously sort of split broadly between the U.S. and Europe. So maybe sort of 2-ish percent, 3-ish percent of our sort of defense sales into the U.S. If we look at Academia, again, I think typically, are sort of 10% -- sort of 9%, 10% of group Academia sales, there's about 3%, 4% of that goes into North America. So -- but I think clearly, there's been a lot of talk about DOGE and its impact on government funding towards Academia. I mean the reality is a lot of U.S. academic institutes have been living over the past 10 years with progressively less and less government funding and [ our business ] clearly accelerated that or the threat of it. But I think they've been -- they have got used to sort of having less reliance on U.S. government funding going to corporates to support the funding. So actually, in the U.S. in Q1, our R&D sales were actually just slightly up. So whether there was a bit of prebuying, I don't know, but they're actually slightly up. But I think, we have seen instances from customers where it is causing delays, not least for one space customer where we had an order of over $1 million that they weren't able to place in Q1, which was a renewal of the software just because of the extra constraints that are coming out from the U.S. government. I mean they will face that order in Q2, but it just has delayed things. So we are seeing sort of that sort of knock-on, but I think overall, at the moment, it's manageable.

The next question is from Andrew Douglas with Jefferies.

I've got 2 questions left because most have been covered. I just want to understand a bit more about the shape of the current year. I think historically, we're expecting kind of broadly flattish first half and then a recovery in organic growth in the second half. Is that still the case? Because I'm just trying to figure out how you can get to unchanged full year guidance and whether you're maybe taking some of the sales growth out of your expectations, but maybe better PIP benefits or maybe other stuff that's happening. I'm just trying to understand how we can get from a minus [ 8% ] organic in the first half to an unchanged full year guidance. And if we are expecting an improvement in the second half, [ this is for ] Angela, are we expecting the -- an unwind maybe of the working capital position? I'm assuming that helped you in the first half in terms of getting your debt down. Just trying to understand the dynamics of that working capital shape if we do indeed have a better second half.

Thanks, Andy, for the question. At the end of the year, we -- of last year, we did give guidance of a 35%, 65% shape. We're still expecting that on profitability incidentally. But you're absolutely right, it's a flattish H1 and then lifting up into H2 is exactly the planning assumption that we're making at the moment. We've always said the Profit Improvement Program is more weighted to the second half. And of course, our profit improvement actions have no relationship to market growth factors. We've always said GBP 10 million in H1 and GBP 20 million in H2. We're bang on that number at the end of Q1. We've actually now taken out [ 90 heads ] additional to the guidance we gave last year in the first quarter. So tracking really, really well. And I'm pleased to say that early indications is it will be slightly better than that GBP 30 million number. But that's obviously put some of that weighting into the second half at the moment. So you're absolutely correct. In terms of working capital, remains the #1 priority, and we are laser focused on it as we get into sort of H1. It's always difficult checking the requirements of things like inventory when the first set of numbers are down slightly from expectations. But I think the encouragement on the order book and also April, we're just remaining on track with the working capital [ GBP 40 million ] improvements that we'd already discussed. I'm quite happy with the progress. We've got a team on that. And I think I also shared with you at the end of the year that we had higher inventory at Q4 and higher debt, and we're progressing well on that particular piece of work.

One quick follow-up, if I may. What gives you guys the confidence that we're going to get that second half recovery? Is it just a kind of moving to a more normalized tariff backdrop, so we don't know what the state of the game is? Or have you been given indications by your customers that we should expect the second half? I'm just trying to figure out why we should have such a marked improvement in that second half, notwithstanding a slow start to the current year.

I mean, Andy, I think we could come back to what we said in our statement in that we can certainly offset the direct impact of tariffs. The second order effect, it's still too early to determine. I don't think -- we don't know, don't think anybody knows, our customers unfortunately don't know either. I'm reassured by April. In 2020 with COVID, we saw April contract really sharply. We haven't seen that happen here. So it feels that people are taking sort of a measured view at the moment. Our order book gives us visibility out to sort of July, August. When we come back at the half year, we'll obviously be able to then provide a greater update.

There are currently no questions registered at this time. [Operator Instructions] There are no more questions waiting at this time. So I'll pass the conference back -- we have a follow-up question...

Let's take one more question then.

We have our next question from Stephan Klepp with HSBC.

Yes. Sorry, I'm a slow mover today. I have 2 more. First of all, SciAps and Micromeritics, can you talk a little bit how things are going for them? You said integration is going well, but you had a minus 10% decline in the U.S. Micromeritics had obviously quite a lot of cleantech exposure. Can you talk us a little bit through how things are looking there? And my second question is on the order book. You said it's up 4%, and that is a reported number. Contribution from your acquisition this year, roughly 10%. So can you tell us how the order intake was developing in the first half? And actually, how does order contribution from the new acquisitions look like at the moment?

Thank you, Stephan. So as I said, look, in terms of the acquisitions for both SciAps and [ Micromeritics ], really well pleased with the quality of the assets that we bought. There have been no surprises. The quality of the business, the products, but also the people and the fit that we expected has all absolutely met our expectations or exceeded expectations. I mean SciAps has -- actually continues to grow really strongly. I think orders and sales were up 30% in SciAps in Q1 as an example. We've moved all of our existing handheld instruments from Malvern Panalytical into the SciAps business. So we've basically made SciAps sort of our center of excellence, if you like, around handhelds. That has already started to bear fruit in terms of new incremental orders, the existing -- our existing sort of [ near-infrared ] handheld instruments from Malvern Panalytical. We've actually had increased levels of sales as a consequence of combining that with SciAps team, basically giving the -- both the sales and the distribution channels, a broader basket of products, that's gone very well. And also, I mean, they've also accelerated one of the innovations by bringing the 2 technical teams together. We've actually accelerated a new revised product going to market. So a lot to be really pleased about there. Micromeritics, really strong business, strong team, strong capabilities, super fit with our Malvern Panalytical business. As I said, we've already received new orders from customers who hadn't previously bought from one or other of the businesses. That cross-sell is starting to bear fruit. And certainly, the sales pipeline opportunity has expanded significantly as a consequence of just having the ability to talk to more customers with that broader basket of products. So that's going very well. In Q1, Micromeritics did have a tough comp in fairness. One that they had quite a bit of backlog they were burning through from '23 at beginning of '24. But if you normalize for that, they're still growing strongly. And it's a combination with Malvern Panalytical, the opportunities and the revenue synergies by funnel, the combined funnel is up over 10%, when the rollbacks was a consequence of having this broader basket of offering to a broader number of customers. So all that is hugely positive. And likewise, within Dynamics with Piezocryst, I mean, that only came in, in December. The integration work of that is now broadly complete. It's a much smaller business. I was out in Dytran with Angela back in March, which is based in California, serving the U.S. aerospace and defense with the sort of commercial space. They're super excited to now have access to the Piezocryst crystals because they can really expand their product range and get them into areas of testing and monitoring of spacecraft that they weren't otherwise able to do because of the temperature limitations. So they see big opportunities to grow that. So I think just coming back to your final point on the order book and the order intake, I'll just refer you back to, I think it was Jonathan's question in terms of just the shape of the orders, the orders have followed the like-for-like sales, slightly better because of the book-to-bill. And within the acquisitions, they are certainly running in line with our expectations and the business plan. Certainly, when we normalize, as I say, for various just in periods of trends, we can really see the continued growth from all the businesses.

Okay. Super. One follow-up, if I may. If you think about the minus 11% in Scientific and obviously being the higher profitability business with a bigger drop-through, should we rewrite on the underlying profitability at that point? Or is it basically as you said, you're going to compensate everything with your measures that you're in control, cost measures and tight control of costs?

Yes. So I think the simple answer to that, Stephan, is if you look at April, Scientific, as I said, on both orders and sales on a reported basis, they were up double digits in April. So we fully -- I think it's against a softer comparator. But it does mean through Q2 that we will recover Scientific back to sort of a flat position. At the full year results, we said we expected the half year to be sort of flattish to last year. We still -- that's still our expectation. So your concern around the Q1 minus 11% and the profit impact, that will recover progressively through April, May and June is our prediction.

There are no questions at this time.

All right. Let me wrap up then. So look, by way of closing, thank you very much for joining the call. We much appreciate it. Clearly, there's a lot going on in the world at the moment. But I think my message to you and the key takeaways are that we are very much focused on execution, focusing on what we can control. And as such, we continue to expect strong progress in 2025. Yes, Q1 was a little softer. However, as I said, it's not a good barometer for the year. And our reported sales for the new primitive group are up, book-to-bill greater than 1x, and April's performance is reassuring as we just talked about. Our Profit Improvement Program is running ahead of target. The acquisitions are performing very well, and we see upside on both cost and revenue synergies, and we can offset the direct impact of tariffs. And importantly, I think we are well prepared to take action and help mitigate against what may happen in the broader market environment. We do have a very high-quality business and strategic actions that we are taking and have taken and have increased our resilience and also position us strongly when markets recover. So thank you very much for joining and look forward to catching up with you all quite soon. Thank you very much.

Thank you very much.

That concludes the Spectris first quarter trading update call. Thank you for your participation. You may now disconnect your lines.